Pranab sticks to six percent-plus growth forecast for FY`10
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Last Updated: Monday, September 07, 2009, 23:54
New Delhi: The second and third quarters of FY'10 are unlikely to see the economy expanding at the pace it did in April-June period, but that does not warrant a downward revision of growth forecast, Finance Minister Pranab Mukherjee said on Monday.

The government estimates that the economy would grow by more than six percent this fiscal. While the first quarter growth was a healthy 6.1 percent, the numbers for the following two quarters are expected to be inadequate.

Mukherjee, addressing the forum of financial writers, said that he was, however, not revising the target of six percent-plus growth rate for the fiscal as the economy will expand at a higher pace in the fourth quarter.

"So far as growth is concerned, I am a little doubtful whether the economy will grow at the same level in second quarter and third quarter as in first quarter. Agriculture growth may be a little less," he said in his opening remarks.

The first quarter growth reflected the stimulus measures provided by the government and the Reserve Bank.

There are apprehensions that erratic monsoon and drought in many parts of the country will slow down farm output in the next six months. The agricultural sector grew by 2.4 percent in the first quarter of this fiscal as compared to 3 percent in the same period last year.

‘Divergence between WPI & CPI inflation is disturbing’

Pranab Mukherjee today described the continuing trend of divergence between the rate of price rise as measured by wholesale prices and retail prices as "disturbing".

He said negative inflation was "statistical advantage" because of high base last year and agreed with the Planning Commission's assessment that wholesale price inflation would turn positive soon.

"Negative inflation is statistical advantage because of the year-on-year basis. On WPI, I do feel and I agree with the Planning Commission's assessment that positive inflation would be there by the year end. The disturbing trend is CPI is not converging with WPI for a very long period of time," the Finance Minister said at the Forum of Financial Writers.

Wholesale price Inflation has been negative for the 12th week in a row at 0.21 percent during the week ended August 22, largely because the rate of price rise was too high at 12.76 percent in a year ago period.

Planning Commission Deputy Chairman Montek Singh Ahluwalia had earlier said that inflation might turn positive in September or October.

On the other hand, inflation based on retail prices of items consumed by agricultural and rural labourers stood at close to 13 percent, and that for industrial workers at close to 12 percent in July.

Bureau Report

First Published: Monday, September 07, 2009, 23:54

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