Pranab confident, India will grow at 9%

Finance Minister Pranab Mukherjee on Tuesday exuded confidence that economy would shortly revert to nine per cent growth rate but identified rising prices as a major concern, although inflation has declined to 8.6 per cent from double digits in June.

For India, the ideal inflation rate would be 4-5 per cent although it may be difficult to attain, the minister said while inaugurating the Economic Editors' Conference in New Delhi.

"I will try to bring it (inflation) down through whatever mechanism we have...it would be ideal if we have 4-5 per cent, but may be difficult. But I do feel that annualised inflation rate would be around six per cent," Mukherjee said.

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Inflation, which has emerged as a big political issue, was 8.6 per cent in September. However, food inflation was 15.53 per cent for the week ending October 9.

Attributing inflation mainly to rising food prices, Mukherjee said, "in terms of consumer price indices (retail prices), inflation in the three major groups -- industrial workers, agricultural labour and rural labour -- have come down to single digit level."

Regarding economic growth, Mukherjee said he hoped it would be 8.5 per cent (plus/minus 0.25 per cent) during 2009-10, rising further to 9 per cent in short term.

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"It is reasonable to expect that the economy will go back to robust growth path of around 9 per cent average that it was before the global crisis slowed it down", Mukherjee said.

Having achieved over 9 per cent rate for the three consecutive years, the economic growth dipped to 6.7 per cent during 2008-09, mainly on account of the global financial meltdown.

However, it picked up to 7.4 per cent in 2009-10 and recorded 8.8 per cent in first quarter of the current fiscal.

"There has been a revival in investment and private consumption demand, though the recovery is yet to attain the pre-2008 momentum...favourable market conditions with improvement in capital flows and business sentiments are also encouraging", Mukherjee said.

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He added that the exports were picking up, manufacturing sector is showing buoyancy and corporate earnings and profit margins have picked up substantially.

Prime Minister Manmohan Singh too had said, in Tokyo this week, that the Indian economy will revert to high growth path of nine per cent from next fiscal and even achieve double digit expansion in coming years.

"It is my expectation that we will return to a 9 per cent growth path in 2011-12. I am confident that the strong fundamentals of the Indian economy will enable us to achieve our objective of double digit in the coming years," Singh had said.