GDP growth would be around 7.2% this fiscal: Pranab Mukherjee

Terming the current fiscal as a "challenging one", Finance Minister Pranab Mukherjee on Thursday said the Indian economy's growth rate would be around 7.2% this financial year.

"...the growth rate would be around 7.2% during the current year...this is a very challenging year for all of us," Mukherjee said while addressing the Chairmen and Managing Directors (CMD) and Chief Executive Officers (CEO) of Banking and Financial Institutions in pre-Budget meeting here today.

The economic growth during the first half of the current fiscal has slipped to 7.3% from 8.6% in the corresponding period a year ago.

He said that due to current uncertainty in global economy as euro zone crisis is still unresolved and there is volatility in international commodity prices especially fuel, it may be difficult to contain the fiscal deficit at 4.6% as targeted during the last budget.

The government had proposed to bring down the fiscal deficit in the current fiscal to 4.6% of the GDP from 4.7% a year ago.

However, the surge in subsidy bill and poor realisation from disinvestment has made the task difficult.

According to official estimates, the subsidy bill of the government is likely to exceed by about Rs1 lakh crore during 2011-12. As far as disinvestment is concerned, the government has been able to mop up around Rs1,100 crore only against the target of Rs40,000 crore

Emphasising that all banks and financial institutions have a common goal of working towards a healthy economy, Mukherjee sought support of all banking and financial institutions to meet various challenges facing the economy and achieve common goal.

"All banks and financial institutions have a common goal of working towards a healthy economy and we should work together to attain this common objective," the minister noted.

Attributing price rise, deceleration in GDP and fiscal deficit to global factors, Mukherjee said the international crisis of 2008 and ongoing Euro zone crisis have impacted us.

"The international crisis of 2008 and the ongoing Euro zone crisis have impacted us also and resulted in problems of inflation, deceleration of GDP and fiscal deficit," he said.