A surprising 7.9% growth in the second quarter notwithstanding, finance minister Pranab Mukherjee today said returning to 9% trajectory remains a big challenge.
"We expect strong growth in the second half of the current year...Our road ahead is full of challenges. The chief amongst them is to take the economy back to 9% per annum growth path," he said speaking at a FICCI conference here.
He further said the growth rate in the first half of the current fiscal signifies resilience of the Indian economy, adding that he is confident of the strength of the stimulus measures taken by the government.
"The GDP number in the first half of the current year vindicates our expectations and provide ample proof of the resilience of the economy," he said.
Impacted by global slowdown, India's growth fell to 6.7% in the last fiscal compared to an average nine per cent in the three preceding years.
However, belying predictions of economists and analysts, the Indian economy grew by 7.9% in the second quarter of this fiscal, up from was 6.1% in the previous quarter, essentially due to a good showing by the industry and the services sector.
"The achievement is particularly significant considering ...unfavourable monsoon which has dampened the growth of the farm sector," Mukherjee said.
In the second quarter of the current fiscal, the manufacturing sector grew by 9.2% while community, social and personal services expanded by double digit at 12.7%.
However, farm and allied sectors inched up only by 0.9%.
This shook the forecasters out of conservatism and prompted RBI, Planning Commission and the government to say growth projections may be revised upwards for the current fiscal.
"Taken together, the two quarters, I do hope it would be possible to achieve seven per cent-plus (growth rate), but it is still too early to predict. I will wait for the third quarter figures," finance minister Pranab Mukherjee had said.
According to Planning Commission deputy chairman Montek Singh Ahluwalia, the performance in the second quarter suggest that there may well have to be an upward revision in GDP growth of 6.5%, which has been projected so far.
The Reserve Bank said it may review the growth forecast for the current fiscal in its monetary policy review next month on the back of 7.9% GDP growth in the second quarter.
The RBI has projected that Indian economy could grow by 6% with upward bias in the current fiscal.
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