Seeking to paint an optimistic picture of the economy, Finance Minister P Chidambaram on Monday said the country will clock a growth rate of 5% in the current fiscal notwithstanding the current stress.
"We are going through a period of stress but there is a ground for optimism...we hope things will become better in the second half of the current fiscal," he said at a press conference here.
The Finance Minister based his optimism on several factors including better-than-expected second quarter GDP growth of 4.8%, improvement in current account deficit position and recovery of exports.
The growth rate in the current fiscal, Chidambaram said, is likely to be 5%.
He further said: "The second quarter GDP growth rate indicates that the economy may be recovering and on a growth trajectory again...performance of Q2 is broadly on the expected line."
With the recent improvement in some important sectors like manufacturing, better performance of exports and with the measures taken by the government the economy can be expected to show further improvement, he said.
Chidambaram also expressed the confidence that the government will be able to achieve the disinvestment target of Rs 40,000 crore and contain the fiscal deficit within 4.8% of the GDP.
"We are still on target. We are on course for disinvestment. We are still on track to achieve Rs40,000 crore target," he said.
Chidambaram said the fiscal deficit has been high in the first half of the current financial year on account of front- loading of expenditure.
"The fiscal deficit at the end of any month does not give a true picture as expenditure is front-loaded and revenues are usually back-loaded. We will contain fiscal deficit at 4.8%," he said.
In the first seven months (April-October) of 2013-14, the fiscal deficit, which is the difference between the earnings and spendings of government, was already at 84.4% of the full-year Budget estimates.
Chidambaram said Plan Expenditure at the end of October was 48.3% of BE, compared to last year's 43.2%. The net tax and non-tax revenues up to October is 43.2% of BE, exactly same as last year, he added.
"There is some momentum in the beginning of the second half. We will push for tax collections to speed up and once revenue collections speed up, we are confident that we will contain the fiscal deficit," Chidambaram said.
He said the government will garner little more from the sale of spectrum than the Budget target of Rs40,000 crore.
Replying to queries on inflation, Chidambaram said the principal responsibility of taming food inflation and all instruments for that lies with state governments.
"For years state governments have simply shrug their responsibility and blamed the central government. I am not saying the central government is not responsible, but principal responsibility in dealing with food inflation lies with state government.
"They must take action against hoarding and profiteering. They must take action on removing the barriers to trade... They must encourage people to improve supply change to bring produce to shelves," he said.
The retail inflation swelled to 10.09% in October, mainly on account of high food prices.
The Wholesale Price Index (WPI) based inflation stood at 8-month high of 7% in October. The rate of price rise in food articles was at 18.19%.
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