Economy on Growth Path: GDP Notches up 7.2% Growth In 2009-10

The Review of the Economy 2009-10 presented by the Prime Minister’s Economic Advisory Council today, which shows a GDP growth of 7.2% in 2009-10 as against 6.7% a year ago, indicates a discernable improvement in our economic activity spurred by an impressive performance of manufacturing and construction sectors. The economic recovery, currently underway, is a testimony to the resilience of the Indian industry and vindicates the role of stimulus packages which were announced by the Government to soften the impact of the global financial crisis.

Mr. Ashok Kajaria, President, PHD Chamber said that the decline in agriculture performance has been on expected lines on account of poor monsoons and floods in some areas but the negative impact has been tempered by good performance of the industry and services sectors.

However, despite the discernable improvement in our economic performance, the path is still strewn with many challenges. In the short to medium term, the surging inflation, high fiscal deficit etc would continue cause concern. Hence it is important that steps be taken so that growth trigger unleashed in the economy is maintained and the 7.2% GDP growth becomes a reality for the current year.

For this it is important to develop a strong political will to implement reforms in real earnest. There is need to improve the conditions of Indian agriculture to address the problem of food inflation. This would be made possible by stepping up public investment in rural infrastructure, improve agriculture research and make the supply chain from farm to mandis more effective.  Furthermore, there is need to ensure efficient management of public finances through prudent expenditure management by drastically reducing wasteful expenditure even while augmenting revenue by broadening the tax base and improving tax administration. Besides, priority should be given to infrastructure and power sector reforms, disinvestment of non-strategic PSUs, effective labour reforms, and ensuring credit availability to industry, particularly the SMEs, at cost effective rates. It is also important to retain the stimulus package in the forthcoming Budget as the withdrawal would reverse the gains so far accrued to our industry and impede the growth momentum, Mr. Kajaria added.

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