Finance secretary says economy to grow at 6.25-7%

Despite the patchy monsoon threatening India’s GDP growth this year, government has chosen to stick to its forecast for now. Finance Secretary Ashok Chawla said on Thursday that the economy was likely to post a growth between 6.25 and 7.0% in the current fiscal. He did however accept that poor monsoon was a matter of serious concern. Chawla said that the government first had to access the extent of the drought or the deficit in rainfall which he said was being done by the state governments. The secretary said that states would tell the central government regarding the damage and what they needed to counter it and that the central government was prepared in terms of being able to supply whatever states needed both in terms of agricultural requirements and otherwise.

India’s finance minister Pranab Mukherjee too had said earlier that he expected the economy to expand more than 6% in the fiscal. However, many economists have warned that the poor monsoon may strip up to one percentage point from India’s GDP growth as the crop sowing in the kharif season remains 20% lower compared with last year.

However, silver lining for the recovery has come from the industrial sector as India’s manufacturing output expanded at an unexpectedly high rate of 7.8% leading to 7.3% growth in overall index of industrial production on annual basis. Analysts feel that while there was strong downside risk to growth from the farm sector, industry performance, if continues to remain robust for rest of the fiscal, may compensate for it.