Chidambaram projects 6.5 percent economic growth

Wednesday, 17 November 2004, 08:00 Hrs
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NEW DELH: Finance Minister P. Chidambaram is optimistic of India recording 6-6.5 percent growth in fiscal 2004-05 despite the poor rainfall's impact on agricultural output.

Supporting the projections of the Reserve Bank of India, the finance minister said here Wednesday: "This is consistent with our analysis as well."

"Even at a relatively lower growth rate of six percent plus for the current year, India will continue to be one of the fastest growing economies of the world," Chidambaram said while addressing the annual Economic Editors' Conference.

On the back of 8.2 percent growth 2003-04 over a low four percent in the previous fiscal, "any growth rate of over six percent should be considered satisfactory," the minister said.

Despite the lower agriculture output this year, he allayed fears of a shortfall in foodgrain stocks.

"Foodgrain stocks at the beginning of November were more than six million tonnes higher than the buffer stock norms, indicating comfortable levels of food supplies," Chidambaram said.

While the less than bountiful monsoon had impacted farm growth expectations, the minister said the overall economic growth prospects have been brightened by the industry and services sector.

"Our confidence regarding the overall growth of the economy has been strengthened by the resilience displayed by industry and services. Domestic industrial activity continues to remain buoyant," he said.

The first quarter GDP estimate indicates a growth rate of 6.8 percent for industrial output, almost one percentage point higher than the corresponding quarter last year.

The Index of Industrial Production (IIP) has also revealed an aggregate industrial growth of 7.9 percent for the first half of the 2004-05 fiscal.

Similarly, the service sector, which accounts for more than half of the total national output, has maintained its growth expectations to record 9.5 percent growth during the first quarter, the minister pointed out.

On the trade front, Chidambaram said while merchandise exports are growing rapidly, the imports are growing even faster "indicating the economy's growth absorptive capacity for imports of basic, intermediate and capital goods."

During the first half of the fiscal, while exports grew 24.4 percent in dollar terms, the non-oil imports grew 25.8 percent.

"The Indian export performance has been particularly commendable as it coincided with a depreciation of the dollar vis-à-vis the rupee as against other major currencies," Chidambaram said.

Source: IANS
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