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FM Happy With 8.6% Growth

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Finance Minister Pranab Mukherjee said on Monday the 8.6 per cent economic growth estimated for the current fiscal was satisfactory in the wake of the rising inflation and trade imbalances. "A 8.6 per cent is quite encouraging despite all these difficulties. Now the other issue is inflation, trade balance.. these are to be addressed," Mukherjee told reporters in New Delhi. Encouraged by 8.6 per cent growth rate estimates for current fiscal, Chief Economic Advisor Kaushik Basu said a 9 per cent economic expansion for the next financial year is "well within target". Mukherjee said despite challenges "it is quite encouraging that it (GDP) is not deteriorating." The Central Statistical Organisation (CSO) on Monday estimated economic growth for the current financial year at 8.6 per cent, as against 8 per cent a year ago. "All along I was maintaining, it should be around 8.5 per cent plus. 8.6 per cent is accepted. My concern is also about the inflation and trade balance," he added. The 8,9 per cent growth in the first half of the current fiscal notwithstanding, the government is battling high inflation, particularly food inflation. The overall inflation has remained above the comfort zone of 5-6 per cent for over a year now. In December, the inflation has shot up to 8.43 per cent, from 7.48 per cent in the previous month. \ The food inflation is ruling at 17.05 per cent for the week ended January 22. The RBI in its quarterly monetary policy review last month upped the March-end inflation projection to 7 per cent, from 5.5 per cent. In the July-September quarter this fiscal, the Current Account deficit (CAD) surged by 72 per cent to USD 15.8 billion, compared to USD 9.2 billion in the same period last year due to higher imports. The country''s CAD, representing the difference in inflows and outflows of foreign exchange, barring capital movements, stood at 2.9 per cent of the GDP last fiscal. 9% Growth Within Next Fiscal Target: Kaushik Basu Encouraged by 8.6 per cent growth rate estimates for current fiscal, Chief Economic Advisor Kaushik Basu said a 9 per cent economic expansion for the next financial year is "well within target". "The prospects for the world as a whole are looking better but still there are uncertain clouds. In that scenario growth of 8.6 per cent is absolutely remarkable. So the 9 per cent which we are aiming for next year is now looking well within target," Basu told reporters. On whether the inflation would affect the growth process, Basu replied, "I really don't see inflation disrupting the growth process." He said in fact the GDP number would have a dampening effect on inflationary pressures. "We have been concerned about inflation but I really feel that the number we have got today is going to dampen inflationary expectation. So I am not seeing that (inflation) could jeopardise the growth story." Basu further said that growth rate for the next two quarters were also looking encouraging but IIP number, which has been fluctuating is to be looked at. The 8.9 per cent growth in the first half of the current fiscal, notwithstanding, the government is battling high inflation, particularly food inflation. The overall inflation has remained above the comfort zone of 5-6 per cent for over a year now. The food inflation is ruling at 17.05 per cent for the week ended January 22. The RBI in its quarterly monetary policy review last month upped the March-end inflation projection to 7 per cent, from 5.5 per cent. (PTI)