India's economy seen gaining momentum in FY10
18 Mar 2009
The Indian economy is expected to grow between 6.5 per cent and 7 per cent in the coming financial year ending 31 March 2010 as the stimulus measures take effect, Abhijit Sen, a member of the planning commission, was quoted as saying.
Sen said the stimulus packages announced by the government and the Reserve Bank of India are expected push up growth rate by 1.5 to 2 percentage points from the expected levels.
He, however, said there was need for more fiscal and monetary steps to maintain growth momentum amidst the global slump and sluggish domestic demand.
He said the plan panel has undertaken a worst-case analysis and on that basis, the growth rate is about 5 per cent.
"That would take the growth rate to 6.5 to 7 per cent," he said on the sidelines of a business conference.
Meanwhile, analysts have raised doubts over the government's earlier estimates of 7.1 per cent growth for 2008-09 following release of December quarter data, which showed a 5.3 per cent growth.
The International Monetary Fund (IMF) also urged India to further ease money supply to fight economic slowdown. The IMF, however, cautioned against additional expenditure and more tax reliefs could raise public debt to unsustainable levels.
The IMF in its annual review of the Indian economy said, there is ''scope for further monetary easing, in light of projected decline in inflationary pressures and the need to reinforce confidence and sustain bank credit.''
Though the key short-run policy objective should be to sustain liquidity and credit flows, ''monetary and structural policies will have to continue to carry most of the burden of adjustment'', the review added.
