Fuelled by healthy double-digit growth in manufacturing and services, the country's economy clocked over 9 per cent growth in the first six months of the financial year.
During July-September this year, the GDP grew by a record 9.2 per cent. "Let us savour the moment," Chidambaram said.
While inflation at 5.23 per cent continues to be a "worry" for Finance Minister Palaniappan Chidambaram, experts caution on the possible overheating of economy and adverse impact of decline in agriculture growth.
"The growth story so far is okay. But, one has to exercise caution against possible overheating in the economy, especially with glaring mismatch in over-flow of funds into the stock market and under-flow into banks" said former Reserve Bank of India Governor Dr Bimal Jalan.
But the Finance Minister was not willing to buy this argument of overheating in the economy. Terming it "premature", Chidambaram cited a statement of the RBI Deputy Governor.
Briefing newsmen, Chidambaram conceded, "inflation at about 4 per cent is tolerable when the economy is growing at 9 per cent plus". All macro-economic parameters are good, but inflation is the only worrying factor, Finance Minister P Chidambaram said.
Chidambaram said that the robust growth was not accidental. Only twice in the past, the GDP growth was over 9.2 per cent as registered in July - September 2006. During fourth quarter of 2005-06, the economy clocked 9.3 per cent. And, the GDP grew at 11.3 per cent in third quarter of 2003-04 during the NDA regime led by then Prime Minister Atal Bihari Vajpayee.
While the UPA Government is gun-go about the healthy growth, agrarian crisis continues to be an issue the centre will have to deal with. Chidambaram cited the "supply side constraints" that were responsible for the recent price rise especially in wheat, sugar and pulses.
On Tuesday, the Congress President Sonia Gandhi had cited the twin issues of price rise and farmers plight at the meeting of parliamentary party. A day after Sonia flagging agrarian crisis as an issue to be dealt with, Central Statistical Organisation (CSO) reported that farm growth has fallen to 1.7 per cent during July - September 2006. In the first quarter i.e. April - June 2006, the agriculture growth was 3.4 per cent.
Planning Commission has targeted 4 per cent agriculture growth during eleventh plan to sustain the 8.5 per cent GDP growth in the medium term.
Chidambaram said, "second quarter is always a lean period for agriculture." He hoped that farm growth would improve with better rabi crop in the coming months.
"Economy drivers are definitely manufacturing and exports as there would be some problem in rural demand owing to lower farm sector growth" said Dr Shashank Bhide at the National Council of Applied Economic Research (NCAER).
In the medium term, Dr Bhide feels, "it is very important to boost agriculture growth to sustain the 9 per cent plus GDP growth".
Meanwhile, Chidambaram reported a 30 per cent growth in revenue collection so far this year while articulating hopes to meeting the revenue and fiscal deficit targets. "I believe we are on target to budget estimates," he said.
As per Finance Ministry data, the fiscal deficit as on October 31,2006 was compressed to Rs 87,100 crore as against Rs 92,068 crore in the same period last year.
Revenue deficit, during the period has been reported to be Rs 67,299 crore in the first seven months of this financial year as against Rs 70,284 crore in the same period last year.
Email KA Badarinath: email@example.com