Finance Minister Pranab Mukherjee on Saturday expressed confidence that the economy in this fiscal could surpass 8.5% growth rate with some 'luck'.
"While drafting the economic survey for 2010-11, (Chief Economic Adviser to the Finance Ministry) Kaushik (Basu) had predicted a growth of about 8.5%. I am confident that with luck, it may be surpassed," Mukherjee said at the 101st Annual General Meeting of the Bharat Chamber of Commerce.
In the first two quarters this fiscal, the economy grew by 8.9%.
Mukherjee said he did not believe that 8.9% expansion in the second quarter of this fiscal could be achieved from a growth rate of 5.5% in 2008-09.
The government's Mid-Year Analysis has projected the economy to grow by up to over nine per cent this fiscal.
Mukherjee said although the Indian economy had withstood the international financial crisis with fortitude and was now the fastest growing economy after China, there were challenges to the country's aspiration for growth in double digits.
If nine per cent growth projected in the Mid-Year Analysis is met, the Indian economy would expand at a pace registered during the three years prior to the global financial crisis.
Observing that there were inflationary pressures on agriculture, he said in the past six-and-a-half years, the government had raised the minimum support price of rice and wheat to encourage farmers to grow more.
Incidentally, food inflation was back in double digits after three weeks in December. The inflation was 12.13% for the week ended December 11.
Earlier on Thursday, Mukherjee had said that "I am afraid there has been some upward movement of food items... of course the weekly fluctuations take place and one of the reason may be the high prices of onion, which (we already) have taken steps".
The wholesale price based inflation for November stood at 7.48%.
The government is trying hard to bring down rates of food items, including onion whose prices have skyrocketed, to tackle high inflation which can affect growth.
The finance minister expressed hope that a good kharif harvest this season would ease the pressure on prices.
Mukherjee said inflation would stand at a 'managable' level of 6.5% by the end of the current fiscal. "Thanks to the fiscal and monetary policies, we could tackle inflation. But more needs to be done," he said.
Admitting that price fluctuation of perishable fruits and vegetables was resulting in price rise and onion prices bringing 'tears to the eyes,' Mukherjee said there was need to set up more cold chains and scientific storage facilities.
"Farmers are ready to produce. The government is ready to provide incentives. But there is a need to reduce the cost of taking the food from the field to the consumer's table. That is an area on which we must concentrate," he said.
He said the current international oil price at 91 USD per barrel was draining a huge amount in government subsidies.