Mukherjee optimistic of achieving over 8.5 percent growth

WASHINGTON - Union Finance Minister Pranab Mukherjee has said that despite prevailing global economic crisis, India will be able to achieve a growth rate of more than 8.5 percent in current financial year.

Addressing a gathering of senior executives from financial services firms at the Institute of International Finance in Washington on Monday evening, Mukherjee endorsed the prediction made by International Monetary Fund that India will achieve a growth rate of 8.8 percent during the current financial year.

Mukherjee said there are three challenges before the Indian economy today-first is to come back on the path of fiscal consolidation and bring down the fiscal deficit to 5.5 percent in the current year and 4.1percent in the next financial year. Second is to contain the rate of inflation which has reached almost double digit i.e., 9.9 percent compared to 2.1 percent in the previous year.

He said that this is mainly due to constraints in supply side of food articles which include cereals, pulses, edible oils and sugar among others.

Mukherejee added that inflation in food articles was more than 17 percent for a long time which will start declining after the middle of July 2010 as the monsoon is expected to be normal this year.

Third challenge before the Indian economy, Mukherjee said is to contain the oil prices “as we have to import more than 70 percent of our demand from outside.”

Mukherjee also said the flow of foreign direct investment in the country has not been disturbed because of the strong fundamentals of Indian economy despite worldwide financial crisis.

He further said during the G-20 Finance Ministers’ meeting in Busan, South Korea, earlier this month, India took a stand that process of fiscal consolidation should be country specific and staggered and should not be enforced in one go in all the countries.

“Besides, India took a stand that there is no need for funding banks from Government exchequer through bank levy etc. rather banking regulation mechanism and institutional framework be put in place to avoid any bank levy etc,” Mukherjee said.

He said both the suggestions were well taken by the member countries. (ANI)