No roll back of fiscal stimulus until budget: Mukherjee
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Last Updated: Wednesday, December 23, 2009, 20:02
Zeenews Bureau/ Stanly Johny

New Delhi: Buoyed over good quarterly figures, Finance Minister Pranab Mukherjee on Wednesday hoped that the economy can achieve 9 percent growth rate in 2-3 years. India has recorded a robust 7.9 percent growth rate in the third quarter.

“India will return to 9 percent growth rate in 2-3 years as there are firm signals of a solid recovery,” Mukherjee told to a conference arranged by PHD Chambers of Commerce here on Wednesday.

Projecting a growth rate of 7.5 to 8 percent this year, he said, “"The Mid Year Review projected a growth rate of 7.75 per cent (for 2009-10), but it would be more appropriate to say 7.5 to 8 per cent", Mukherjee said

During the second quarter (July-October) of the current fiscal, the economy grew by 7.9 per cent, more than what was estimated by any analyst or think tank.

However, he added that to achieve a 9-10 percent growth “agricultural growth must be around 4 percent”. “Reforms in this sector will be the cornerstone of India’s growth,” the Finance Minister said.

Expressing concern over the low growth figures of agriculture sector, Mukherjee highlighted, “In the first quarter, the agricultural sector’s contribution to GDP was 2.5 percent but in the second quarter it came down to around to less than one percent.”

Following drought and floods in several parts of the country, the agriculture and allied sector growth rate in the second quarter decelerated to 0.9 per cent from 2.7 per cent in the corresponding period last year.

On the positive side, the Minister said the industry was showing signs of recovery by posting over a 10 per cent growth rate in October.

“Different sectors of economy are also growing. The manufacturing output is rising, domestic savings and agriculture sector is also on the rise. Demand is also picking up in other sectors,” he added.

The Minister further said that checking inflation and cutting fiscal deficit are major challenges for the Indian government in the short-to-medium term.

“Containing price rise, fiscal consolidation, providing adequate resources to developmental agenda and improving the delivering mechanism will some of the challenges ahead.”

Food inflation, according to recent data, shot up to a decade's high of 20 per cent and the fiscal deficit is projected to go up to 6.8 per cent in the current fiscal, more than what was prescribed in the Fiscal Responsibility and Budget Management (FRBM) Act.

Replying to a question on withdrawal of stimulus measures meant to combat the impact of the global financial meltdown, Mukherjee said, "wait till the Budget (in February)"

Referring to the Direct Tax Code, Mukherjee said there were nine areas of concern and the Ministry would take inputs from various agencies, including industry chambers, before finalising the Code which will replace the Income Tax Act, 1961.

The Minister said the Code would considerably simplify the income tax laws to the benefit of individual tax payers and corporate.

The Finance Ministry has already placed the draft Code in the public domain, seeking opinion of all stakeholders with a view to finetuning the proposals.

As regards the Goods and Services Tax (GST), the Minister said "considerable progress has been made in the roll-out plan."

The government is proposing to introduce from April 1, 2010, the GST, which will subsume various indirect taxes like excise, service tax and other levies imposed by the states.

With PTI inputs

First Published: Wednesday, December 23, 2009, 20:02

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