Improvement in India's GDP growth could be higher than 7.2 %

Upbeat on the pace of economic recovery during the second half of 2009-10, Finance Minister Pranab Mukherjee last week maintained that the final GDP (gross domestic product) growth numbers for the fiscal year could show an improvement over the 7.2 per cent expansion projected by the Central Statistical Organisation (CSO) in its advance estimates released earlier this week.

Interacting with the media here on the sidelines of the 42nd consultative committee meeting (CCM) of the 'Colombo Plan' group of nations for economic and social improvement in South and Southeast Asia, Mukherjee pointed out that even a 7.2 per cent growth would not be bad in the wake of the current uncertainty in the global economic scenario.

("When the final figures come [in], particularly for the third quarter, I think there may be [an] improvement [over the CSO's estimate), he said. He felt that even otherwise, the GDP growth figure for the current fiscal could be revised upwards as had happened in 2008-09 when the actual expansion turned out to be 6.7 per cent as against the advance estimate of 6.5 per cent. The Finance Minister pointed to the Economic Survey's projection and exuded confidence that the economy could grow in the upper band of up to 7.75 per cent during the current fiscal.

"The Economic Survey 2008-09 had indicated that the upper band of growth in real GDP for the year 2009-10 could be around 7.75 per cent," he said.

Mukherjee noted that while the growing integration of the Indian economy with the rest of the world created new opportunities and rising expectations, it also brought new challenges and made the task of sustaining high growth more challenging in view of the new risks and responsibilities.

Referring to the recent global financial crisis as a good case in point, he said that along with all other economies, India too, was forced to downgrade its growth projections owing to the impact of the meltdown. "Despite the stresses, India has been able to withstand the recessionary trend better than most other economies and is a front runner in leading the global recovery process," he said. Pointing to the fiscal and monetary stimulus packages put in place to combat the slowdown in the wake of the global financial crisis which eventually led to a better-than-expected 7.9 per cent GDP growth during the second quarter this fiscal,

Mr. Mukherjee said: "It [economic growth] vindicates the timely policy measures taken by the government to mitigate the adverse impact of the financial crisis on India and the positive response of all stakeholders and partners in development."

Alongside, Mukherjee noted that while the rising domestic savings and investments coupled with a nationwide stress on skill upgradation could push up growth rates higher, the weak link was the country's infrastructure.

"It is estimated that investment requirement in the infrastructure sector would be $514 billion between 2007 and 2012," he said. For such a huge investment, he said stress was being laid on the PPP (public-private partnership) model.

(Courtesy The Hindu)