Economy to grow by around 7 pc in FY'09, hopes FM

Revival in steel and cement sectors and ample funds available with states for spending today gave the centre the confidence that the country will grow by around 7 per cent in the current fiscal. For the first nine months of this fiscal, the economy grew by 6.9 per cent and the government's advance estimates pegged the growth at 7.1 per cent for the entire 2008-09. Replying to a question on economic growth during an interview, Mukherjee said, "All these are estimates and of course between 6.9 and 7.1 (there is) not much difference, but I do hope when the final figures come out it would be around seven per cent." The economy grew by 5.3 per cent in the third quarter of current fiscal. To a query whether market is losing confidence due to slackening growth, he said, "I don't agree with your (interviewer's) contention." He said exact numbers could be known only after it becomes clear how will economy respond to stimulus packages. "All these things...have to be seen for example slow revival of steel and cement industry has started, housing industry have been made adequate allocations, states have been provided funds, they themselves have good cash reserves of about Rs 91,000 crore, quite a few of them would like to spend a substantial quantum of money this year... all this would be available after March 31," he added. "These are speculation, estimates...How will economy respond to stimulus package, how is it going to respond to the various steps we have taken in the fiscal year." When asked whether measures to stimulate economy in the Interim Budget were taken under pressure, he said, "No, this is a normal practice. Every FM does (it)." "I have followed exactly the same pattern as every other FM does. I have not changed an iota of the direct tax. I have not imposed any new tax to mop up additional resources, that is the constitutional propriety," he said. The Finance Minister had cut service tax, excise duty by two per cent each, besides extending four per cent reduction in excise duty beyond this fiscal to propel the slowing down economy. He said,"(The) government is continuing... as and when situation would demand we would respond. Situation demanded...we responded, it is still unfolding and we would have to respond in future."