Pinning hopes on a normal monsoon, Finance Minister Pranab Mukherjee said on Sunday that the Indian economy will expand by 8.5 per cent this fiscal and achieve double-digit growth in the next two years.
"If the monsoon this year is favourable, then we will get 8.5 per cent (this year) and nine per cent plus next year and double digit growth thereafter in a sustainable manner," Mukherjee said at an event on financial inclusion organised by Assocham in Kolkata.
Prime Minister Manmohan Singh had also said on Saturday that the Indian economy is targeted to grow by double digits in the 2-3 years.
During 2009-10, Indian economy grew at better than expected rate of 7.4 per cent. The GDP expanded over 8.6 per cent in the last quarter of the same fiscal.
However, according to the India Meteorological Department (IMD), June rainfall was disappointing but still 60 per cent higher than in the same month a year ago. Monsoon rains were 16 per cent below normal in June, IMD had said.
The economy had slowed down during 2008-09, after the global financial downturn impacted it and grew by just 6.7 per cent that year. However, stimulus provided by the government enabled the economy to recover, because of which the measures were partly withdrawn in the Budget for 2010-11.
Mukherjee said he had resorted to the gradual exit from the stimulus measures taken at the time of economic downturn, considering the growth pattern of the economy.
"I cannot remain on the ground by providing more and more stimulus," he said, adding that the stimulus packages, equivalent to three per cent of GDP, had paid dividends by arresting the decline in GDP growth.
"This (the GDP growth) has happened because of the strategy adopted," he said.
He said the government has targeted a fiscal deficit of 5.5 per cent of GDP this year (2010-11) and 4.1 per cent next year.
Speaking about financial inclusion, the finance minister said that it was an economic necessity.
Mukherjee also said that financial inclusion was a necessary condition for sustainable equitable growth.
He added that the unique identification (UID) project would be a powerful tool towards financial inclusion as it would help in establishing identity of the people and meet know your customer (KYC) norms.
To a query on the occasion, RBI deputy governor KC Chakrabarty ruled out powers to micro-finance institutions (MFIs) to take deposits.
"MFIs cannot take deposits. If they want to, then MFIs will have to be regulated like a bank," Chakrabarty said.