The Hindu Business Line : High growth rate to repeat in 2008

New Delhi, Dec. 31 The Finance Minister, Mr P. Chidambaram, sounded confident and upbeat when Business Line caught up with him as 2007 rolled to an end. Though there are some murmurs that the economy could slow down in 2008, the Finance Minister did not reveal any trace of worry when asked about his projections for the coming year. Declining to get into any specifics, all that a smiling Finance Minister said was “let us see.”

The clue to Mr Chidambaram’s confidence could be in his assessment that the current fiscal would see an economic growth of near 9 per cent. “I am not changing my growth forecast for 2007-08 and it continues to be close to 9 per cent. The average for the last four years has been 8.6 per cent. I am sure the growth in 2007-08 would also be at that average. For next year (2008-09), I am confident that with more investments taking place, we can aim to grow at 9 per cent.” This is what he said on the sidelines of a public function in the Capital on New Year eve.

Economists, however, point to two party poopers—high food prices and the appreciating rupee. While much would depend on official procurement of foodgrains in the coming months, some statistical evidence points to a sliver of hope. Official figures of year-on-year inflation show that wheat prices were down 2.13 per cent at the wholesale level in mid-December, compared with the year-ago period. Fruits and vegetables, where prices follow arrival trends, too were down 2.67 per cent mid-December from those prevailing around the same time last year. Only rice prices continue to rule high, by as much as 7.28 per cent this December compared to 2006.

Economists believe that the hardening of the rupee was an expected fallout, given the huge forex inflows in the recent years.