New Delhi, Dec 25 (Inditop.com) The Indian economy could grow at 9 percent next fiscal, helped by a rise in domestic demand and higher industrial output, even as high fiscal deficit remained an area of concern, said a senior analyst with Ernst and Young.
“If we have a normal monsoon next year, we can expect the economy to grow at 9 percent. We already have a good industrial production and we expect it to be higher during 2010-11,” said Ashvin Parekh, national director of Ernst and Young Financial Services.
“We also expect India’s exports to rise and its industrial growth at around 10 percent by the end of this fiscal,” Parekh told IANS, agreeing with the assessment of Finance Minister Pranab Mukherjee that the economy can grow 8 percent this fiscal.
The predictions on India’s growth were altered upward after the official data on gross domestic product showed a 7.9 percent expansion during the second quarter this fiscal, against 7-7.5 percent that was expected earlier.
There were further signs of a recovery when the country’s merchandise exports grew 18.2 percent in November after as many as 13 successive months of decline since October last year. Industrial production, too, was up by a robust 10.3 in October.
Previously, the country’s growth had slipped to 6.7 percent in the last fiscal from over 9 percent in the three preceding years. In the first quarter of the current fiscal, the growth in the country’s gross domestic product was 6.1 percent.
According to Parekh, an area of concern which policy-makers must address was the fiscal deficit of 6.8 percent and to bring it down to the desired levels the government needed to look at ways to raise additional finances.
“The government will have to accelerate the divestment process. It is the only way to bring down the fiscal deficit,” he said, adding the government must look at divestment of stake in power utility NTPC and the National Mineral Development Corp seriously.
These two entities alone can generate up to $3.6 billion this fiscal, said Parekh, adding the government should target at least four-eight state-run enterprises for divestment during the next fiscal.
So far the government has divested its stake in two state-run firms — Oil India Ltd and another power entity National Hydroelectric Power Corp this fiscal.
“This would help bring down the fiscal deficit and also ensure that it meets it target to divest the targeted state-run firms by the end of eleventh five-year plan — that is by 2012,” said Parekh.
“This can generate $7 billion and bring the fiscal down to 4.8 percent.”
