India was the second fastest growing major economy globally during 2009-10, despite the worst global recession in decades and a crippling drought.
The Indian economy grew 7.4 per cent for 2009-10, with a better than expected growth of 8.6 per cent in the January-March quarter. This growth came on the back of last year’s drought, which hit agriculture. Better still for the economy, growth for the coming year (2010-11) is being pegged at an even higher 8.5 per cent.
Finance minister Pranab Mukherjee said on Monday that the “growth momentum” of the fourth quarter would continue with 8.5 per cent growth in FY11. “The growth numbers are pleasant but not really surprising, because we were expecting them to be robust, which they have turned out to be. This clearly indicates the momentum in the economy, and the 8.5-percentage point estimation for 2010-11 is a clear possibility,” said finance secretary Ashok Chawla.
Other FY11 estimates are more cautious, but still peg growth at over eight per cent. Prime Minister Manmohan Singh had said last week the government’s overall growth target was 10 per cent.
The strong growth could see a rollback of stimulus measures introduced to combat the slowdown. The government has already cut back some sops in the Budget. Another possibility is an interest rate hike by the RBI to rein in inflation, nearing 10 per cent.