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Pranab sticks to six percent-plus growth forecast for FY`10

Last Updated: Monday, September 7, 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 7, 2009 - 23:54

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