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New Delhi , Nov. 14

THE Finance Ministry is confident about the economy registering a seven per cent plus growth this year on the back of a sustained industrial revival and a strong monsoon-led agricultural rebound.

"Assuming growth rates of more than eight per cent and six per cent in the agriculture and allied sector, and industry, respectively, and a reasonably good performance by the services sector, the overall growth in real GDP can be expected to exceed seven per cent in 2003-04," the Ministry said in its Mid-Year Review.

The Finance Ministry's expectation is more optimistic than the "6.5-7 per cent, with an upward bias" projection made by the Governor of the Reserve Bank of India (RBI), Dr Y.V. Reddy, in his recent Mid-Term Review of Monetary and Credit Policy on November 3.

Moreover, the Finance Ministry's Review has said: "Like in several previous occasions (such as 1988-89, 1980-81, 1975-76 and 1967-68), in years of a good monsoon following a drought, the (farm) sector may grow at a double-digit rate."

In other words, if agriculture ends up growing at over 10 per cent (against the eight per cent assumption), even the current seven per cent plus estimate may turn out to be conservative.

The Review has referred to a host of developments that "augur well for the growth prospects of the current year". Among the strong macro-economic fundamentals are the $92.6 billion of forex reserves as on end-October (with a build-up of $17.2 billion during the current fiscal alone, despite redemption of $5.18 billion of Resurgent India Bonds) and moderate inflation levels.

While the wholesale inflation rate had risen to 6.6 per cent in April due to the impact of drought and the war in Iraq, the arrival of a bumper kharif crop, along with the continued prudent fiscal and monetary stance, has changed the situation.

As a result, the annual inflation for 2003-04 is likely to be in the region of four per cent, which again is optimistic relative to the RBI's end-fiscal projection of "4-4.5 per cent, with a possible downward bias".

According to the Review, the country's foodgrain output is heading towards a new record of 220 million tonnes during the current year, crossing the earlier peak of 212 million tonnes.

The output prospects for oilseeds and pulses, too, are "bright", owing to good spatial distribution of rainfall. In the case of industry, the news has been most encouraging for automobiles and steel.

Production of automobiles grew to 6.3 million units in 2002-03 from 5.1 million units in the previous year, while exports rose from 184,680 to 305,368 units.

This year the industry has grown by eight per cent, with exports of 221,331 units during April-September 2003, up 68 per cent. Besides finished automobiles, there has also been a surge in export of auto components, "which signals an important success of skill-intensive manufacturing exports from India".

Today, India has emerged as a significant export of steel. "After a 36.8 per cent increase in exports of finished steel in 2002-03, such exports in the first half of the current fiscal grew by a further 39 per cent to 2.65 million tonnes."

The other positive developments have been in the infrastructure areas of telecom and roads.

The first half of the current fiscal has seen an unprecedented addition of 10.2 million subscribers.Under the National Highway Development Project (NHDP), 2,174 km of highways had been four-laned by end-September, of which 1,403 km lay on the Golden Quadrilateral (GQ) route.

"The implementation of the GQ is broadly on schedule, with a target date of completion of December 2004," the Review added.

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