Govt moves growth estimate up to 9 pc

Fin min says sustaining such high growth will need financial reforms on a long term basis

PTI | December 7, 2010



On the back of faster economic expansion in the first half, the government today said the growth rate could cross 9 pc in the current fiscal itself and revert to the pre-crisis levels.

It is estimated that growth in 2010-11 will be 8.75 pc with 0.35 pc variation on either side. The range indicates the possibility of crossing the nine pc mark this year itself, said the Mid-Year Analysis of the economy for 2010-11 tabled by finance minister Pranab Mukherjee in Parliament today.

"Sustaining such high levels of growth for a number of years, however, will require significant deepening of reforms initiative," said finance ministry's analysis of the economic situation.

With regard to inflation, which was the major worry of the government since more than a year, the Analysis said, it has started coming down and is placed at 8.6 pc in October this year compared to 11 pc witnessed in April 2010.

"I am hoping that inflation will come down to 6 pc by March 2011," Mukherjee told reporters after tabling the report in Parliament amid din over 2G spectrum allocation issue.

Contrary to estimates by various think tanks, the economy during second quarter expanded by 8.9 pc taking the overall growth rate to the same level in the first half and raised hopes of 9 pc growth in the current fiscal.

Having grown by over 9 pc in three years in a row, the economic growth rate slipped to 6.7 pc in 2008-09 on account of global financial meltdown.

The growth rate, however, picked up to 7.4 pc in 2009-10 as a result of stimulus provided by the government and the Reserve Bank of India.

The economy, according to earlier estimates, was expected to grow by 8.5 pc in the current fiscal rising to the pre-crisis level of 9 pc in the next fiscal.

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