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Home arrow Railway arrow Confident of Recovering some of the Loss in Growth Momentum: Mukherjee
Confident of Recovering some of the Loss in Growth Momentum: Mukherjee Print E-mail
Written by Viswanath   
Thursday, 01 December 2011
The Union Finance Minister Pranab Mukherjee said that although the second quarter (Q2) estimates of the Gross Domestic Product (GDP) are low by our recent growth experience ,yet, considering the current global context and the slowdown in the domestic industrial sector, the growth performance is not all that disappointing.

Earlier, the Central Statistical Organisation(CSO) has released the second quarter (Q2) estimates of the Gross Domestic Product. The GDP growth in Q2 2011-12 at factor cost and at 2004-05 prices is estimated at 6.9 per cent. With that the first half (H1) growth for 2011-12 amounts to 7.3 per cent in real terms. In terms of sectoral break-up,the GDP growth in Q2 is 3.2 per cent in agriculture, forestry and fishing sector, 3.2 percent in industry and 9.3 per cent in services sector. The Finance Minister said that the main reason for decline in the GDP growth is slowdown in industrial growth, in particular in investment growth. The negative growth in mining sector along with slowdown in construction sector has also contributed to the decline in the Q2 GDP growth, he added.

Confident of recovering some of the loss in the growth momentum Pranab Mukherjee said that there are some encouraging signs as exports have increased by a robust 52 per cent in dollar terms during April-September 2011, although there has been a slowdown in October. In addition, some key sectors such as power and steel have shown stronger growth despite odds. The Government has now put in place the New Manufacturing Policy to give a big push to the manufacturing sector. He said that agriculture is expected to provide a buffer with indication of good Kharif crop and improved sowing, as of date, for Rabi crops. The service sector has retained its growth momentum at near double digits, the Minister added.

Stating  that the Government is committed to its indicated fiscal balance for the year 2011-12, the Finance Minister said, " We are monitoring our resource mobilization efforts as well as our expenditure. We would not hesitate to take the required correctives to remain on the path of fiscal prudence so that the short to medium-term growth prospects are not undermined."

"Today’s GDP growth figure for Q2 at 6.9 percent is only an official vindication of the weakness already apparent in the industrial sectors. CII is extremely concerned about the direction of the economic growth trajectory. A significant pull down in investments is apparent and this can take the overall economy down further, since there are very few developments in the country, which can be termed as confidence boosters. In such situations, the importance of sentiments cannot be overemphasized. With high cost of money, owing to 13 consecutive rate hikes by RBI, the cost of capital in India is one of the highest in the world and only some strong positive developments would induce industry to invest. CII is seeing efforts being taken to ensure that reforms are kick started and hopes that the momentum continues. With exports holding up in the face of an adverse global situation, the current situation of the Indian economy are induced largely by domestic issues and therefore, the corrective actions are very much in the hands of  domestic policy makers. CII hopes that these decisions would be taken with a sense of urgency. In this direction one of the most useful steps would be to ensure that we have a shelf of bankable projects, particularly in infrastructure, to ensure that the boost that investments need is provided by increasing the absorptive capacity in this sector," said Mr, Chandrajit Banerjee, Director General, CII.
Last Updated ( Thursday, 01 December 2011 )
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