Economic growth in the current quarter will print around 6%, taking overall growth this financial year to over 5%, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, told dna.
Prime minister Manmohan Singh said earlier that the country will log 5.5% growth this financial year.
Ahluwalia is betting on a “good” monsoon to result in increased income for rural India. “In the next three months, you would see that there is movement. Production data for core industries for July-August shows a significant uptrend. It is still not what I call strong, but compared to what it was two months ago, it has definitely gone up. Agriculture would be good because of good monsoon,” he said. “Good agricultural growth also means rural income would be higher. So non-agricultural rural production would also be higher.”
Growth in the first quarter of this financial year was disappointing at 4.4%.
However, encouragingly, the index of industrial production number for the July-August period has shown an improvement of 2.6% — the first expansion in three months. On fiscal deficit, Ahluwalia said the government would be able to keep it at or below 4.8% of the gross domestic product, which works out to Rs542,499 crore.
At the end of August, the fiscal deficit had climbed to Rs404,651 crore, indicating the government had already spent 74.6% of its annual target. However, finance minister P Chidambaram has said that the government has front-loaded its expenditure and the number for the full fiscal will be in line with the target.
Ahluwalia said even the current account deficit will be managed within the prescribed limits by the finance ministry, which has pegged it at $70 billion for this fiscal — a projection even Raghuram Rajan, the Reserve Bank of India governor, appears to be comfortable with.