Monday, July 30, 2007

Growth rate to touch 10%

ET reports today that the revised growth rate for 2006-07 may be 10%. A key factor underlying the higher growth rate would be a rise in growth rate in agriculture to 4%.

The numbers had been pinching myself in disbelief. A growth rate of 4% in agriculture was seen until recently as something of a mirage. A 10% overall growth rate would put a quite different complexion on the various fiscal deficit targets. It would explain why the FM is confident of reducing the revenue deficit to zero by 2008-09.

Does a high growth rate for 2006-07 mean a lower growth rate for the current year? Not really. The forecasts of 8.5-9% have been arrived at independently of the base for last year.

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