Indian economy is on course of accelerating growth : FM

Fiscal deficit to be brought down to 4.1 per cent.

The Finance Minister Mr.Pranab Mukherjee has expressed confidence that the Indian economy is on course to accelerating growth and the Government is confident of carrying forward the process of fiscal consolidation.  Addressing the 102nd Annual General Meeting of the Indian Merchants’ Chamber in Mumbai on Tuesday, Mr Mukherjee said India had been treading the path of fiscal consolidation since 2003-04, but the unusual developments during 2008-09 necessiated deviation from this path.  He said the stimulus package of Rs 183,000 crores, amounting to 3.3 per cent of GDP, nevertheless helped the Indian economy bounce back from recession faster than any other economy in the world.

“The upward revision in the GDP growth rate is mainly on account of the extra-ordinary buoyancy shown by the industrial sector and the better-than-anticipated performance of the farm sector. Trade and other services picked up, precipitating the on-ongoing economic recovery” said the Finance Minister. “The immediate task is to quickly revert to the 9 per cent growth and then find ways and means to cross the ‘double digit’ growth barrier. With a normal monsoon predicted, and with industrial recovery and investment activity gaining momentum, a positive change is visible” he added.

The Finance Minister also justified the partial roll back of stimulus measures and resumption of fiscal consolidation process, following economic recovery taking root in the second quarter of 2009-10. The Medium Term Fiscal Policy Statement 2010-11 has provided the roadmap  with fiscal deficit declining to 4.8 per cent of GDP in 2010-11 and further to 4.1 per cent in 2012-13.  

Mr Mukherjee termed the new ‘Goods and Services Tax’  and the proposed Direct Tax Code as enterprise friendly, Mr.Pranab Mukherjee sought the help of trade bodies and chambers of commerce to push for their early enactment. He said the constitutional amendment is a long drawn process and will require two-thirds majority support in both houses of parliament and be ratified by at least 15 state assemblies.

Mr Mukherjee said that India would be happy to see the world economy revive early. He however cautioned that since such a revival will be an exogenous development, the Indian exporters must explore new segments and new markets to sustain growth. He also called upon the Indian industry to fully exploit the potential of the domestic market.