Continue fiscal stimulus for sustainable growth: India Inc

NEW DELHI: Indian industry today said the GDP estimates for this fiscal are encouraging but the government needs to continue with economic stimulus measures, especially for the manufacturing sector, to sustain growth.

"In the coming budget the government should not slacken the stimulus for the manufacturing sector. While agriculture has been the big driver concern remain over the manufacturing sector where the expected growth is almost same as last year," Ficci secretary general Amit Mitra said.

Terming the projected growth rate of agriculture as a boon, Mitra, however, called for caution as the sector remains dependent on the vagaries of the monsoon.

Led by a smart recovery in farm output, the government today estimated economic growth for the current financial year at 8.6 per cent, as against 8 per cent a year ago.

It said agriculture and allied activities are likely to grow at 5.4 per cent in 2010-11, compared to just 0.4 per cent in 2009-10.

Manufacturing sector is expected to grow by 8.8 per cent, the same as last fiscal.

Commenting on the estimates, industry body PHD Chamber said the gradual withdrawal of the fiscal stimulus in the last budget has not had the desired affect.

"The exit from fiscal stimulus measures...and gradual tightening of the monetary policy has not helped either way. Food inflation is still hovering at double digits and industry growth has slowed to 2.7 per cent during November 2010," PHD Chamber president Salil Bhandari said.

However, Assocham said the projected growth of the economy would help in cooling down the high commodity prices in near future.