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Saturday , November 17 , 2012
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Europe dip fails to dampen FM spirits

New Delhi, Nov. 16: Finance minister P. Chidambaram today expressed optimism about growth picking up in the last two quarters of this financial year, while allaying fears of missing the fiscal deficit target because of the lukewarm response to the spectrum auction.

“The second-quarter number will be known by the end of this month and I think there will be a pick-up in the third and fourth quarters,” Chidambaram told reporters here.

He said the government had taken a number of steps to revive growth, but a global slowdown had partly blunted their impact.

“We are taking a number of steps to revive economic growth. Only this morning you have read that the Eurozone is formally in recession. We are nowhere near that situation. We are still growing at 5.5 per cent. Our goal is to tide ourselves over this difficult period and end the year on a reasonably satisfactory note,” he said.

GDP (gross domestic product) grew at a sluggish 5.5 per cent in the first quarter of this financial year; growth had slumped to nearly a decade low of 5.3 per cent in the January-March 2012 quarter.

“We are hopeful of ending the 2012-13 at a satisfactory level of growth and present a reasonable budget and then aim for high growth in the next financial year,” the finance minister said.

According to a joint survey by the CII and consulting firm McKinsey, growth is expected to be below 6 per cent in 2013-14 because of the turbulence in Europe and the US.

In the budget for 2012-13, the then finance minister Pranab Mukherjee had projected the economy to grow around 7.6 per cent. However, the Reserve Bank in its half-yearly review of the monetary policy sharply lowered the growth projection to 5.8 per cent from 6.5 per cent.

The finance minister is confident that the government will meet its fiscal deficit target of 5.3 per cent of GDP even though the spectrum auction did not fetch as much as the government had expected.

“It was too early to say that the fiscal deficit target would not be met. There is still time for the divestment process to start and also the auction process has not ended,” the finance minister said.

“We still have a good time of four-and-a-half months and, therefore, it is too early to say that we won’t reach the target. It is my intention to reach the target,” he said.

GAAR decision

Chidambaram said “a decision has been taken on general anti-avoidance rules (GAAR). The draft has been sent to the Prime Minister. Hopefully, the decision will be made public in the next 7-10 days”.