Thaindian News

New Delhi, Dec 7 (IANS) India’s economic growth is likely to cross 9 percent in the current fiscal on the back of better than estimated 8.9 percent expansion in the first two quarters, Finance Minister Pranab Mukherjee said in a mid-term analysis of the economy for fiscal 2010-11.

“Growth rate for the fiscal 2010-11 will be 8.75 percent plus minus 0.35 percent. In the first two quarters we have grown 8.9 percent. That is quite encouraging,” Mukherjee told reporters after tabling the mid-year analysis of the economy in both houses of parliament Tuesday.

India’s gross domestic product (GDP) grew 8.8 percent and 8.9 percent in the first and second quarter respectively beating the budgetary estimate of 8.5 percent.

“This growth is also broadly based, with recovery in all three sectors, agriculture, industry and services, and in private consumption and investment. Abundant late rainfall is boosting agriculture,” according to the mid-year analysis document tabled in the parliament.

“All indicators therefore portend well for output growth crossing 9 percent for the entire fiscal year 2010-11, although some risks remain in the global economy which widens the band of expected growth outcomes (plus or minus 0.35 percent around a revised projection of 8.75 percent; up from a baseline level of 8.5 percent plus-minus 0.25 percent projected in the Economic Survey 2009-10.”

Terming inflation a big concern, the finance minister said it was likely to come down to six percent by the end of the current fiscal.

“Inflation is coming down. Now it is in the single digit but I would like further easing. I am hoping that by March it will be around 6 percent. But it should come down further,” said Mukherjee.

India’s annual rate of inflation based on wholesale prices declined to 8.58 percent in October from 8.62 in the previous month.

The annual food inflation dropped to a four-month low of 8.6 percent for the week ended Nov 20. Moderating food inflation may give some comfort to the policy makers. However, it is still much above the central bank’s comfort level despite an aggressive tight money policy since January.

The apex bank had hiked both its short-term borrowing and lending rates by 25 basis points each Nov 2, tweaking its policy rates for the sixth time since the start of this calendar year to curb inflationary expectations.