New Delhi: The economy would get back to nine per cent growth rate by 2011, says an article by the global rating agency Standard & Poor`s, an estimate higher than other agencies.
"India is on course to return to the pre-crisis growth rates of about nine per cent from 2011," said a guest opinion article recently published by S&P`s Ratings Services, titled `Why India Will Continue To Gain Stature In The Global Economy.`
However, the challenge is not merely achieving a nine per cent growth rate but also sustaining it, said DK Joshi, principal economist with Crisil, a subsidiary of S&P India.
The economy grew at a growth rate of about nine per cent till 2008, after which it was hit by the global financial slowdown by September of that year. However, in the second quarter of the current fiscal GDP grew at 7.9 per cent.
According to the article, realising the country`s potential will mean accelerating reforms to improve the investment climate, productivity, and domestic demand to offset the impact of weak performances among advanced economies.
Areas that it has suggested for immediate policy action include addressing high debts and deficits, infrastructure improvement, opening the door to more foreign investments, streamlining the tax system, amending the labour laws and reforming the financial sector.
The fiscal deficit for the current fiscal is projected to be high 6.8 per cent after the stimulus packages and higher public spending.
While on the growth front, in the second quarter of the current fiscal, the country pegged a GDP rate of 7.9 per cent. There are hopes that GDP growth for this year would be at seven per cent, a good percentage point above the RBI forecast of six.
In contrast with advanced economies, the domestic financial sector stayed fairly healthy and that made the country`s stimulus program more effective than elsewhere and accelerated its recovery," said Crisil`s Joshi.