Overcome barriers to sustain double-digit growth, says FM

Finance Minister Pranab Mukherjee today said growth in gross domestic product in the second half of the year was expected to be as good as it was in the first two quarters. He said the India economy should aim for double-digit growth, but rising prices, fiscal deficit and the global economic situation posed challenges. He, however, ruled out any immediate concern due to high capital inflows.

“It (double-digit growth) must be on a sustainable basis and for that we shall have to ensure that the challenges we are facing today, one on the price front, another on fiscal consolidation and, third, certain developments which are taking place, are met,” Mukherjee said at the annual session of the PHD Chamber of Commerce and Industry.

 

Wholesale food inflation was at double-digit levels, at 12.13 per cent, for the week ended December 11, the highest in six weeks. This was primarily due to the rise in prices of vegetables and other perishables during the week. The government cited the rise in prices of onions, which rose 4.56 per cent during the week, as one reason for high food inflation.

Mukherjee said the next two quarters (October-December and January-March) were expected to be as encouraging, if not better, and the country would be able to reach 8.5-8.7 per cent of GDP growth this year, and “perhaps next year will be able to reach a higher level”.

The Indian economy grew by 8.9 per cent in the first two quarters this financial year. The government's Mid-Year Analysis projects the economy to grow by a little over 9.1 per cent in 2010-11.

On capital inflows, the finance minister said he was not perturbed and there was no need to panic. FII inflows in the year had touched $38 billion (Rs 1.7 lakh crore) till November.

“We have the capacity to absorb these levels (of capital inflows). If this goes beyond a point, definitely that would be a matter of concern but that may be in the near future, not right now and, therefore, I am not pressing a panic button now,” he said.

He also hoped “better sense” would prevail upon Opposition parties and the logjam witnessed in the Winter Session of Parliament over the 2G telecom scam would not be seen in the Budget Session.