The strong numbers of the index of industrial production (IIP) notwithstanding, finance minister Pranab Mukherjee on Friday maintained a conservative growth forecast of 8.75 per cent for this fiscal.
"I am a bit conservative, so I would be happy if it (GDP growth) is 8.75 per cent," Pranab Mukherjee said at the annual general meeting of the Associated Chambers of Commerce and Industry of India (Assocham).
"Figures suggest the industrial growth for the past seven months averaged at 10.3 per cent. We hope double-digit momentum in industrial growth will be sustained," Mukherjee said. IIP numbers zoomed to 10.8 per cent in October 2010.
In February 2010 the Economic Survey of India had pegged the growth of the gross domestic production (GDP) at 8.5 per cent for the current fiscal, with 0.25 per cent variation on either side, while the mid- year review had projected a growth of 8.75 per cent, with 0.35 per cent variation on either side.
However, Mukherjee cautioned against the current account deficit and the crisis in European markets that account for about 36 per cent of Indian exports. "Current account deficit would be around three per cent of GDP and in absolute terms perhaps around $ 55- 56 billion (this fiscal) and cannot be maintained for a very long period of time," he said.
"Therefore, recovery of exports is absolutely necessary and those are linked with global developments," he added.
Mukherjee said because of the stimulus, the fiscal deficit widened to over 6.4 per cent in the last financial year but exuded confidence that it would be pruned to 5.5 per cent this year, as projected in the Budget.
The government plans to bring down the fiscal deficit to three per cent by 2013-14.
The FM urged financial services players to take greater interest in the rural markets.
"Our rural economy is quite insulated from global impulses. I have no hesitation in saying that the rural market in India has saved the woes of many an urban Indian," he said.
"It has shown that for business in India to gain and sustain itself, it is important to have a strong rural footprint. Indeed, I would urge the business community to focus more proactively on our rural areas," he said.
On the current political situation he said that the Indian democracy has become noisier.
"Perhaps our democracy has become a bit noisier. Time has come when a little silence is called for," Mukherjee said.
Courtesy: Mail Today