Growth may be revised upward from 6.9 percent: Pranab

Pakistan Telegraph (IANS) Tuesday 7th February, 2012

The economic growth for the current financial year which was projected Tuesday at 6.9 percent, is likely to be revised upwards on the back of improvement in business sentiments and moderating inflation, Finance Minister Pranab Mukherjee said.

"Business sentiments have started improving, nonetheless it is an area of concern and we shall have to get more focused on reaching the higher growth trajectory at the same time keeping in mind that inflation continue to be at a moderate rate," Mukherjee told reporters here.

According to an advance estimate of national income released by the department of statistics, India's economic growth is expected to slow down to 6.9 percent in 2011-12, substantially down from the around 9 percent growth projected by the finance minister in the union budget last February.

The country's gross domestic product (GDP) had increased by 8.4 percent in 2010-11.

Reacting to the data, Mukherjee said: "Figures of advance estimates for GDP for the current fiscal somewhat look disappointing by our recent growth experience, yet considering the current global context and the slowdown in the domestic industrial sector in particular, the growth performance is not all that surprising."

The finance minister indicated that reviving growth and curbing inflationary pressure would be his priorities in the union budget for 2012-13 which will be presented in the parliament March 16.

"We have to manage growth as well as inflationary pressure and also the path of fiscal consolidation. No doubt these are the challenging tasks," he said.

Mukherjee said a sharp drop in industrial growth, particularly in investment growth, has pulled down the overall GDP growth this year.

Gross Fixed Capital Formation, an indicator of investments toward creating assets, grew at a slower rate to Rs.26,09,963 crore in 2011-12 as against Rs.23,31,382 crore in the previous financial year. Any weakening in this indicator signifies that the economy is slowing.

Among key sectors that slowed down in the fiscal ending March 31 are manufacturing, which is expected to expand by just 3.9 percent, while the mining sector will see a negative growth of -2.2 percent.

According to the latest estimates available on the index of industrial production, the index of manufacturing registered growth of 4.1 percent during April-November of the current fiscal.

However, the finance minister pointed out that there have been some encouraging signs in the recent weeks on business sentiments and other economic indicators, especially moderation in inflationary pressure and appreciation in the value of the rupee.