India can attain 10% growth in 2008-09: FM

Finance Minister P Chidambaram today expressed hope that the economy would be able to grow at 10 per cent next year if productivity in agriculture is improved.

"Our goal is to touch the magical number of 10 per cent growth. Can we do it this year? I am doubtful. Can we do it next year? I think it is possible. If we can get our act together and push agriculture growth to 4.5 per cent, then India can grow at 10 per cent in 2008-09," Chidambaram said at the India Policy Forum, 2007, organised by economic think-tank NCAER.

Earlier during the day, talking to mediapersons after a meeting with chief commissioners of income tax, the minister expressed confidence that the revenue deficit would be eliminated by 2008-09.

This is a key deficit management target under the Fiscal Responsibility and Budgetary Management (FRBM) Act.

A report by the Prime Minister's Economic Advisory Council had on Monday said the central government's revenue deficit is unlikely to be eliminated by 2008-09.

It had also pointed out that there are substantial off-budget liabilities aggregating 2 per cent of GDP, and potential expenditure increase, after the Sixth Pay Commission makes its recommendations.

When asked about this, Chidambaram said the report did not say the target would not be met, but only mentioned the difficulty in achieving the target.

"There is a subtle difference between 'difficult to meet' and 'would not be met'. We have been right so far (in meeting the revenue deficit target). There is no reason why we should be wrong next year."

The revenue deficit stood at 2 per cent of GDP in 2006-07 and is to be cut to 1.5 per cent of GDP in the current fiscal year.

The FM said the government would soon issue guidelines on determining fair market value of stock options given by companies to their employees for calculating fringe benefit tax (FBT).

"Guidelines (on fair market value) would be issued shortly," he said. Chidambaram denied there was any ambiguity about taxing employee stock options (ESOPs).

Ruling out any extension of the date for submitting income tax returns, he asked the taxpayers to file their returns by July 31.

"I suggest you file (I-T returns) today. Don't wait until the last day. Please file today," he said, when asked whether the government would consider extending the date for filing of returns by individual taxpayers.

Also, the government may not allow taxpayers to submit returns through post offices this year.

"Well, it may not be necessary this year. Last year was an extraordinary situation when there was threat of labour dispute. But no decision has been taken yet," he said.

At the NCAER function, Chidambaram said it was unfair to compare India and China.

"We have to work within the boundaries of democracy and hence we have to make adjustments. We have larger concerns. It is within these rules that one has to play the game.... I think India's 9 per cent growth is comparable to China's 10 per cent."

"India's growth is now driven more by investment. Indian industries and services sectors are trying to extract more value from each rupee invested. That is driving productivity gain in the Indian economy," Chidambaram added.