FinMin sticks to 7% GDP growth target

The Finance Ministry today said the economy was poised to grow by 7% this fiscal despite the delay in monsoon, but admitted that high global oil prices were a matter of concern.

"Monsoon is slightly delayed. But it is a bit premature to ring the alarm bell," Chief Economic Advisor Ashok Lahiri said, adding there was no reason to revise the growth forecast as yet.

Both Finance Ministry and RBI have forecast a 7% growth for this fiscal, a slight improvement over 6.9% estimated in 2004-05.

Though the ministry is unfazed by the monsoon situation so far, it shared RBI's concerns on high global oil prices.

Though global oil prices shot up to 2-month high at over $55 a barrel, the government today deferred a decision to revise the domestic prices of petrol and diesel.

"We share RBI's views on global oil prices. It is a matter of concern," Lahiri said on the sidelines of a conference on postal services here.

RBI Deputy Governor V Leeladhar said in Mumbai that persistently high global oil prices could have a negative impact on India's economic growth.

However, he said the moderate interest rate would have a positive impact on the economy.

Moreover, Finance Minister P Chidambaram has promised to keep fiscal deficit at less than 4.1% and lower market borrowing. This, in turn, will boost bank lending to other needy sectors.