India returning to high growth path: FM
Kolkata: Finance Minister Pranab Mukherjee on Monday said that India is reverting to pre-crisis growth level of 9 per cent although high inflation and surge in capital flows continue to remain matters of concern.
Pointing out that economy recorded a growth rate of 8.9 per cent during the first half of the current fiscal, he said, it "takes us back on the high growth path that the economy was traversing on in the years prior to the crisis.
The concern on inflation remains".
Mukherjee was speaking at the 2nd International Finance Conference at IIM here.
India was growing at over nine per cent before the global financial crisis hit the world and pulled down country`s growth rate to 6.7 per cent in 2008-09. The growth rate, however, improved to 7.4 per cent in 2009-10.
Hoping that the world economy would improve during 2011, Mukherjee said, "India`s growth momentum, to some extent, is affected by developments in the western world. A faster recovery in the west is in the interest of all.
"In Europe, there are some concerns, with Ireland seeking help from the European Union and the International Monetary Fund (IMF). A few other countries in the European Union may also be facing sovereign debt problems", he added.
As regards rising prices and spurt in capital flows, the Minister said, "major emerging market economies are experiencing robust growth, though surge in capital inflows and inflation, including from the hardening of global commodity price, is a source of worry."
According to experts, besides demand-supply mismatch, spurt in flow of overseas capital too is stoking inflation.
As per recent data, portfolio investment during 2010 more than doubled to USD 39 billion from USD 18 billion a year ago.
Although India has moved on to the high economic expansion path, advanced countries including the US and EU nations continue to grapple with sluggish growth.
The country, according to some estimates, may record a growth of 9 per cent in the current fiscal itself.
The IMF has projected a growth rate of 8.8 per cent during 2010-11, up from 7.4 per cent a year ago.
Price rise, however, has continued to be a sore point with food inflation jumping to the year high level of 18.32 percent for the week ended December 25.
The government had taken host of steps to tame rising prices. These include anti-hording operations and permitting duty-free import of essential food items.