December 02, 2008

Indian economy to grow by about 8% in 2008-09 – Report

Reuters reported that India's economy is expected to grow by around 8% in the current fiscal year and annual inflation may moderate in a few weeks.

India’s central bank and most other forecasts have pegged growth in Indian economy at 8% to 8.5% in the 2008-09 financial year as the global economic slowdown and monetary tightening takes its toll. Indian economy is estimated to have grown at 8.7% in 2007-08, slower than the previous year as higher interest rates hurt consumer demand.

Mr Montek Singh Ahluwalia deputy chairman of India's Planning Commission said that "My projection was 8% to 8.5%. I will be happy at the lower end. A growth of around 8% is quite acceptable. I do hope that in the next few weeks inflation will moderate. The government can take more measures if prices are contained."

Meanwhile, Mr P Chidambaram union finance minister expects the economy to grow more than 8% in the current fiscal year. The government wants growth of 9% or above to reduce widespread poverty and create jobs. He said that 9% plus with 4% inflation is the ideal rate although a ministry report has said just sustaining 9% growth would be a challenge due to inflation pressures and infrastructure constraints.

It may be noted that the government and the central bank have taken fiscal and monetary steps to calm price pressures ahead of key state elections later in 2008 and federal polls in 2009.