FM sticks to 8.5pc growth forecast

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Mumbai, July 13 (PTI) Refusing to be swayed by the IMF''s optimistic projection, Finance Minister Pranab Mukherjee today tried to play it safe by sticking to his budget estimate of 8.5 per cent economic growth this fiscal. However, he eyed much better economic growth at 9 per cent and then in double digits in the years to come. "I am confident that we are poised for achieving a GDP growth of 8.5 per cent in 2010-11 with the blessings of a good monsoon. Though the IMF has predicted a higher growth, I would like to (be) conservative," Mukherjee said at a bank awards ceremony organised by business daily Financial Express here this evening. The IMF recently upgraded its forecast for Indian economic growth to 9.5 per cent this calendar year from its earlier projection of 8.8 per cent, made in April. While the Fund projects growth for the calendar year, the government goes by the fiscal year. As such, the growth projections by the IMF and the government are not comparable. Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia said, "We should encourage them (IMF) to have positive views. The IMF talks about calendar year. Our estimate of 8.5 per cent growth is for the fiscal year. They have been quite bullish. They think we can do it." Ahuluwalia also projected economic growth at 8.5 per cent, with upward bias. It is for the first time that the IMF has projected such an optimistic picture for the Indian economy. Earlier, the Fund was very conservative and economic growth generally surpasses its predictions. "For the last five years, they (IMF) have been pitching our growth less than what it was. They are over optimistic," Ahluwalia said. At a separate function of UTI, Mukherjee said, "I will not say we are still out of the woods.The immediate task before us (the government) is to quickly revert to the GDP growth path of 9 per cent and then find the means to cross the double-digit growth barrier." Stressing on spreading banking facility, he said high economic growth requires that financial resources are used at maximum efficiency. "The real issue in extending banking facility to uncovered population emanates from the geographical diversity of India and complexity of the our economic system. The competing needs for financial resources required for high growth necessitates that these resources are used at its maximum possible efficiency," he said. The Finance Minister said consolidation in banking, meeting capital requirements of Indian banks, leveraging advanced technology and effectively managing human resources are major areas of concern for Indian banks.

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