Emphasis on investment fed growth: Govt

The Centre claimed that it was not just the monsoon alone, but the government's stress on investment, which was responsible for the economy clocking a growth rate of over 8 per cent during the current fiscal.

Finance secretary D C Gupta told reporters that he was hopeful that the growth momentum would continue in the next fiscal too, since the recent interim Budget had maintained the thrust on investment initiatives.

Referring to the advance projections of GDP growth, released by the Central Statistical Organisation today, Gupta said the initiatives included the three funds set up for boosting investments in agriculture, small-scale and infrastructure sectors and the reduction in peak customs duty.

"These will help us maintain growth in future too", he said, adding that 2003-04 would end with the projected inflation rate of 4 to 4.5 per cent.

The finance secretary said the GDP growth figures were in line with the Budget projections for the current fiscal.

Giving a disaggregated analysis of the figures, he said: "The overall rate of growth makes us optimistic. Our assessment is that along with the trend in agriculture, the trends in manufacturing sector are also encouraging in terms of future sustainability".

He said the growth rates in manufacturing sector and services had improved over last fiscal. On the issue of the huge idle cash surplus with corporates, Gupta said the government was committed towards encouraging investment avenues. On inflation, Gupta said the weekly inflation rate has started decelerating.

He added that it will gather momentum because of the decling costs due to the budget measures like duty reduction and relaxation of ECB norms.

The secretary said an analysis of the trends for the high growth rate years of 1994-95 to 96-97 made by the finance ministry shows, that the critical factor in sustaining it was the high investment rate, and the present policy was also focusses in this direction.

He said except for a 9 per cent GDP growth rate recorded in 1975-76 and a 10.5 per cent in 1988-89, this was the highest growth rate ever.

He claimed that the lower growth in construction, this year was on account of the high base effect of the previous years. But on the whole, the country was doing better as evidenced from the pick up in non-oil imports, improved corporate results and higher non-food credit offtake.