India will grow 8.75 percent now, 9 percent soon: Mukherjee

NEW DELHI - With clear signals of an all-round upturn, thanks to the fiscal stimulus measures since December 2008, the Indian economy will grow at 8.25-8.75 percent this fiscal, speeding to 9 percent soon, Finance Minister Pranab Mukherjee said Tuesday.

“The recovery is also broad-based across industry, services and agriculture,” Mukherjee said, inaugurating the annual Economic Editors’ Conference here, attended by some 300 journalists from across India.

The minister said India was expected to grow at 8.25-8.75 percent this fiscal as the economy was gaining momentum from the pre-crisis period that started in 2008, due to one of the worst global slowdowns in nearly eight decades.

“Our intent now is for gradual exit from the stimulus measures,” said Mukherjee. “Fiscal consolidation is needed, but it should be caliberated. Exit should be country-specific.”

India’s gross domestic product had expanded by 8.8 percent in the first quarter of this fiscal, led by a robust 12.4 percent expansion in the manufacturing sector. The economy had expanded by just 6 percent in the corresponding period of last fiscal.

“In the short term, it is reasonable to expect that the economy will go back to the robust growth path of around 9 per cent average that it was on before the global crisis slowed it down in 2008,” Mukherjee said.

“To begin with, there has been a revival in investment and private consumption demand, though the recovery is yet to attain the pre-2008 momentum. Second, Indian exports have recorded impressive growth since November-December 2009.”

The minister said there was a revival of both investment and consumption demand that will augur well for industry, even as the country’s exports had started picking up from November last year and capital market conditions had improved vastly.

He also said the fiscal deficit target of 5.5 percent for this fiscal will be met.

The minister also touched upon the reforms process and said the divestment was on track, seen by the overwhelming response to the Coal India public offer, the Direct Taxes Bill was being considered by parliament and fuel pricing has been made flexible.

“It is often said that reforms in India are slow reflecting the democratic sanction process — but, nevertheless, sure as it has larger backing. Going forward, I believe the Indian economy would take its rightful place in the global economic order.”

Among those who addressed the inaugural session of the two-day conference included the two ministers of state in the finance ministry, S.S. Palanimanickam and Namo Narain Meena, apart from Finance Secretary Ashok Chawla.