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FM confident of close to 8 pc economic growth

Finance Minister P Chidambaram exudes confidence that economy would grow nearly by eight per cent this year and fiscal consolidation targets would be met in the current financial year.

business Updated: Aug 29, 2008 18:39 IST

Finance Minister P Chidambaram on Friday exuded confidence that economy would grow nearly by eight per cent this year and fiscal consolidation targets would be met in the current financial year.

"I am confident that this year too we will be more or less correct in our assessment of yearly growth. For example, last year I was the only one who maintained that it would be close to nine per cent and eventually it turned out to be 9.1 per cent. I am confident this year also growth will be close to eight per cent," Chidambaram told reporters.

Indian economy grew by 7.9 per cent in the first quarter of the current fiscal as against 9.2 per cent in the same period a year ago, according to figures released by the Central Statistical Organisation (CSO) on Friday.

He said what is more important is the figures given by CSO for Gross Fixed Capital Formation (GFCF) and stocks, which show that there is high savings rate and high investment rate in the economy.

The figures, released on Friday, showed that GFCF is at 32.3 per cent in the first quarter against 32 per cent in the corresponding period a year ago, and change in stocks at 2.1 per cent, the same level as the first quarter last year.

Chidambaram also said fiscal deficit target would be met this fiscal. The Government has proposed to bring down fiscal deficit to 2.5 per cent of GDP and revenue deficit to one per cent this fiscal.

The Fiscal Responsibility and Budgetary Management (FRBM) Act stipulates that the government reduce fiscal deficit by 0.3 per cent every year and revenue deficit by 0.5 per cent every year.

Revenue deficit was expected to be eliminated by the end of the current fiscal, but Chidambaram had said in his Budget speech for this fiscal that one more year may be needed to eliminate the revenue deficit.