India on Friday exuded confidence that its economy will expand by 9-10 per cent in the near future -- a rate that was inconceivable till a year ago -- helped by stimulus measures.
"If the current trend continues it would be possible to have 9-10 per cent growth rate. India is on growth trajectory," Finance Minister Pranab Mukherjee said at the Pravasi Bharatiya Divas event in New Delhi.
This fiscal, he sees the economy clocking a growth of 7.7 per cent thanks to various stimulus measures, although these have resulted in widening fiscal deficit -- the gap between the government's income and expenditure.
A higher fiscal stimulus negatively impacts the country's sovereign ratings, which in turn inflates the borrowing costs.
Fiscal deficit is projected to widen to 6.8 per cent of the GDP in FY'10, although it was expected to be contained at 2.5 per cent as of 2008-09.
But, Mukherjee said the stimulus measures have started paying dividends, as the Indian economy grew 7.9 per cent in the second quarter. He expressed optimism that India would grow by 7.7 per cent this fiscal from 6.7 per cent in FY'09.
Earlier in the day, Prime Minister Manmohan Singh too said that India would clock 9-10 per cent growth.
Mukherjee pointed out that despite economic slowdown in 2008-09, India recorded 8.6 per cent average annual economic growth rate during 2004-09.
The stimulus measures include a 6 per cent cut in excise duty and 2 per cent in service tax.
Image: Finance Minister Pranab Mukherjee with Minister for Road Transport and Highways Kamal Nath at the 8th Pravasi Bharatiya Divas on Friday. Photograph: Rajesh Karkera
