Thaindian News

New Delhi, Oct 19 (IANS) India’s growth will fall below 8 percent, Finance Minister Pranab Mukherjee said Wednesday, adding that the government was unlikely to meet the 4.6 percent fiscal deficit target during the current financial year because of high commodity prices and turbulence in US and European economies.

“Let me not hide the fact that I have been disappointed by our growth performance over the last few months,” Mukherjee said at the Economic Editors conference here.

“It is evident that India’s growth rate in 2011-12 will be less than what we were expecting in February when I presented the budget,” he said.

The economy was predicted to grow at 9 percent this fiscal. The April-June quarter saw GDP expanding by 7.7 percent — the weakest in six quarters.

On fiscal deficit, Mukherjee said the government was making “strenuous attempts” to curb fiscal deficit but meeting the 4.6 percent target would be challenging.

In the union budget for 2011-12, Mukherjee proposed to reduce fiscal deficit to 4.6 percent this financial year from 4.7 percent in the previous year.

The finance minister said the government was able to curb fiscal deficit in 2010-11 mainly because of huge revenue from 3G spectrum allocation.

“One of the largest fiscal corrections was achieved in 2010-11 when fiscal deficit to GDP ratio declined to 4.7 percent from a level of 6.4 percent in the 2009-10,” he said.

Mukherjee said the government was looking for right opportunity to sell its stake in public sector firms.

The government hopes to mop up Rs.40,000 crore by divesting its stake in different public sector undertakings.

“We always keep a tab on the market, watch the situation. If the situation is right we will go for the disinvestment,” he said. However, the finance minister refused to comment on whether the government would be able to meet the disinvestment target.

“It is too early to make any commitment to number,” he said.

India’s industrial production has slowed down considerably in the past few months. It was registered at a sluggish 4.1 percent in August rising a bit from the 3.8 percent seen in July — its lowest in almost two years.

“Most observers are expecting India’s growth to go down to below 8 percent. This is disappointing but at the same time we must not lose perspective of the global situation,” said Mukherjee.

The finance minister also said that he expected inflation, which has stuck to over 9 percent for 10 months now, to start coming down from December.

“I am hoping that we will end the fiscal year around 7 percent,” he said.