The Hindu Business Line : Chidambaram confident of better GDP growth rate

The Finance Minister, Mr P. Chidambaram, on Thursday expressed confidence that the economic growth rate for 2007-08 would finally turn out to be better than the 8.7 per cent advance estimate put out by the Central Statistical Organisation (CSO) today.

“While I take this bit of news with a sense of disappointment, I think the final news should be better. There is some disappointment, but I am not too despondent. I am pretty confident. Like all estimates, these estimates are usually revised upwards because these are conservative,” Mr Chidambaram told reporters here.

Mr Chidambaram said that he was reasonably confident that this estimate can only move upwards and that he would at this stage not come to any conclusion except to say that growth will be closer to 9 per cent than what may appear at this moment.

On the reasons behind the lower GDP estimate of 8.7 per cent for 2007-08 as against revised GDP growth of 9.6 per cent for 2006-07, Mr Chidambaram said that the main reason appears to be that while agriculture, forestry and fishing was estimated to grow at 3.7 per cent in the first half, for the whole year, the CSO is projecting growth of only 2.6 per cent.

He pointed out that Crisil, NCAER and CMIE have estimated agriculture growth rate for 2007-08 at 3.4 per cent, 3.8 per cent and 3.9 per cent respectively.

“I have spoken to the Agriculture Ministry. They do not share the assessment that growth rate in agriculture for the whole year would only be 2.6 per cent,” he said. Moreover, there was also the issue of the increased base of 2006-07 at 9.6 per cent as against the earlier level of 9.4 per cent.

“The increase in the base in the previous year is also perhaps having an impact on the projections of growth of 2007-08,” Mr Chidambaram said.

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