Economy showing early signs of recovery: FM

Finance Minister Pranab Mukherjee on Tuesday said the economy was showing early signs of recovery and explained that the government had to increase borrowings to invest more in the absence of private investments.

Finance Minister Pranab Mukherjee on Tuesday said the economy was showing early signs of recovery and explained that the government had to increase borrowings to invest more in the absence of private investments.

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There are signs of revival in the domestic industry like cement and automobile, including two and three wheelers, he told Lok Sabha, replying to the debate on Union Budget 2009-10.

Cement production has increased by 13.1 per cent while sales of automobile witnessed a 14.3 per cent in the month of June, driven by demand for two-wheeler and thanks to easier credit availibility, he said.

Noting that the country has to return to the path of fiscal consolidation, he said the government had to resort to large borrowing, as private sector is shying away. "They don't have the resources to invest."

Investment is very much needed to bring the economy back on the path of 9 per cent GDP growth.