India sees 7.5pc growth despite global turmoil

December 2, 2011
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A woman protests against high cost of living in India/FILE
NEW DELHI, Dec 2 – India’s economy should expand by “over 7.5 percent” this year despite weak growth in the latest financial quarter and global economic turmoil, Finance Minister Pranab Mukherjee said on Friday.

Growth slumped to a two-year low of 6.9 percent in the second financial quarter, official data this week showed, hit by a string of interest rate hikes and the stumbling world economy.

But Mukherjee said: “Taking into account (the trend) of the last two quarters, it appears growth (in the year to March 2012) would be over 7.5 percent.

“Considering the current global context, that is not all that disappointing,” Mukherjee told the Hindustan Times Leadership Conference in New Delhi. He added that he was “confident we will be recovering some of the losses in our growth momentum.”

The economy grew 8.5 percent in the previous financial year.

Mukhjerjee’s projection is far more rosy than some private economists who expect expansion this year to be as low as 6.5 percent, with the country shifting to a new, slower growth trajectory.

The economy has been hobbled by 13 interest rate hikes in less than two years that have failed to tame inflation, still running at close to 10 percent.

The growth downturn is an additional burden for the government, which is facing strident opposition over its efforts to jump-start its stalled reform agenda by opening up India’s vast retail market to global competition.

Mukherjee said “narrow political interests” were standing in the way of retail reform announced late last month.

Shopkeepers staged a strike Thursday as the main opposition party stepped up protests against plans to open the retail sector to foreign supermarket chains such as US giant Wal-Mart.

Mukherjee said he was seeking to break the deadlock over retail reform that has paralysed parliament.

“I am not saying I will be able to do it (achieve agreement) but the process is on,” he said.

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