Will economy record 7.1 per cent growth in current fiscal?

NEW DELHI: With the economic growth crashing to over five-year lows of 5.3 per cent in the third quarter, there are apprehensions whether the economy would register a 7.1 per cent expansion for the entire 2008-09, as pegged by the government.

The government confidently maintained that the economy would register a growth rate of seven per cent in FY'09.

"Third quarter was expected to be worst of all. Full year, I expect in the vicinity of seven per cent. I suppose we should be able to do better in the last quarter," Minister of State for Finance Pawan Kumar Bansal said.

Indian economy grew by 6.9 per cent in the first nine months of this fiscal, which might make it difficult to attain 7.1 per cent growth for the whole fiscal, as is calculated in the advance estimates by the Centre for Statistical Organisation.

Chief Statistician Pronab Sen also said, "It is unlikely that the growth is going to be 7.1 per cent (for the entire 2008-09)."

The economy has to grow above seven per cent in the fourth quarter to make it 7.1 per cent for the entire fiscal.

"Broadly in line with our expectations...will add up to close to 7 per cent for the year as a whole...We are not very disappointed, we are not pessimistic about the number," Economic Affairs Secretary Ashok Chawla said on Q3 numbers.

Prime Minister's Economic Advisory Council Chairman Suresh Tendulkar expects better performance in the fourth quarter as some of the sectors have started looking up.

"I am optimistic that we will reach above seven per cent in the current fiscal," Tendulkar said.

While, stressing that the Indian economy won't be able to maintain seven per cent growth in the current fiscal, Moody's arm said that the third quarter figure "was disappointing."

"India's December quarter GDP results were disappointing. The governments advance estimate of seven per cent for the current fiscal year will certainly be missed," Moody's Economy.com said in a report.

It added that the massive slowdown in growth during the final months of 2008 has now dismissed speculation that India is more resilient in this global turmoil because it is more domestically oriented.

"The overly optimistic projection needs to substantially revised downward...It now appears that India is in the same boat as its neighboring Asian economies. ," the report added.

Crisil Principal Economist D K Joshi said GDP growth will not be more than 6.5 per cent.

"(The) government will not be able to achieve over seven per cent growth. The stimulus packages will take 6-8 months for the economy to take off and around 8-9 months to get about seven per cent," he said.