Finance Minister P. Chidambaram

NEW DELHI: : Enthused by the 8.1 per cent GDP (gross domestic product) growth in the April-June quarter, Finance Minister P. Chidambaram on Friday was optimistic of the economy achieving a seven-to-eight per cent growth this fiscal.

Briefing newspersons here, Mr. Chidambaram expressed confidence that the overall performance could be better still if the industry sustained the growth on the further opening up of the economy and the farm sector, inched up on higher investments in agriculture and allied activities.

The 8.1 per cent growth was on the back of a 7.6 per cent growth during the corresponding period in 2004-05. Moreover, it was mainly backed by a robust growth in industry and services wherein the manufacturing sector posted a healthy 11.3 per cent while most of the service sectors achieved over eight per cent.

Traditional laggard

According to Central Statistical Organisation (CSO) data, the traditional laggard was the farm sector, which clocked a two per cent growth during April-June this fiscal as compared to 3.8 per cent in the same quarter a year ago.

Mr. Chidambaram said that even though the overall showing in April-June this year was impressive, it had "good" and "not-so-good" news. The good was that the industry grew by 9.7 per cent against 6.8 per cent during the corresponding period last year.The services sector also logged 9.8 per cent compared to 9.5 per cent last year. The not-so-good news was the two per cent farm growth.

"This means, we must maintain the growth in industry to compensate the low growth in agriculture and must stimulate the growth in agriculture."

`Ought to do better'

"By and large, we are happy with [the] first quarter. But I think we can and we ought to do better...I am optimistic. We must ensure no sand is thrown into the wheels [of industry]," he said.

Asked if his expectation was for a growth of more than seven per cent in 2005-06, he said: "My goal is to maintain seven per cent and aim at eight per cent. In the medium term, it should go beyond eight per cent... But we are still the second-fastest growing economy in the world. Need not tell you who is the first. We must strive to become the first."

Constraints

At the top is China which continues to beat India and other emerging nations in terms of economic growth. Noting that to beat China would require a much higher savings level and larger domestic and foreign direct investment (FDI), Mr. Chidambaram said "we must try harder and continue to open and liberalise the economy [to achieve this]... There are constraints. Within the constraints, we must try harder."

Mr. Chidambaram referred to the recent full meeting of the Planning Commission on agriculture in which Prime Minister Manmohan Singh announced the need for massive investments, especially in small and medium irrigation schemes, watershed as well as sprinkler and drip-irrigation programmes.

In this regard, he also noted that the suggestion of dovetailing the irrigation and watershed programmes, both of which figure in the National Rural Employment Guarantee Programme as well as the `Bharat Nirman' programme.

"Massive investment is possible if [the] economy throws up surplus. This is possible if industry and services do well and corporate tax, excise and service tax grow," he said adding that the surplus were also required for funding the social sector schemes.

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