India will soon break into the double-digit growth club, finance minister Pranab Mukherjee said on Saturday, assuring industry captains that the government would not fully roll back stimulus until the economy enters a phase of strong and sustained recovery.
High food prices, however, remain a key concern for the government, he said.
“The positives from our recent performance outweigh the negatives, so that one can hope to see the economy breaking the double-digit growth barrier in the very near future,” he told delegates at FICCI’s annual general meeting.
On Friday, the finance minister signalled a partial rollback of the fiscal sops announced through 2008-09 to counter the fallout of the world economy’s worst downturn in 80 years.
He announced a two percentage point hike in excise duty for most manufactured goods, but restructured the income tax slabs giving more money in the hands of people.
“It (stimulus) can be fully effected when the recovery in private demand ... is sufficiently robust," Mukherjee said.
The finance minister said that high food prices remain a cause for concern, which has been driven by supply-crunch of essential commodities because of poor monsoons.
Food price inflation is hovering around 18 per cent, as insufficient rains brought down the kharif (summer) crop output.
Farm income is set to contract by 2.8 per cent in 2009-10, even as the overall economy is projected to grow by 7.2 per cent. “Rabi crop (winter) output is expected to be above average,” Mukherjee said.
On exports, which have started growing since October after contracting for 13 months, he said it was time to look beyond traditional markets of the USA and Europe.