State Gazette

Why? Two reasons. Last year’s achievement, while bright, is part-statistical; it merely comes as double of 2002-03’s rain-starved growth, with agriculture down to a miserable minus 5 per cent. Abundant rains last season buoyed the farm sector by an astounding 9.1 per cent over the year. Secondly, China is clamping down on an investment boom and expects growth to slow down to 7 per cent in 2004 from a seven-year high of over 9 per cent in 2003. So, India might even end up the fastest growing nation!

India’s 600-million-strong farm sector thus remains the key to good growth, a sentiment that industry is backing too. It’s expecting demand for agri products to go through the roof this year. But for farm growth to log over three per cent this fiscal, it would need a substantial expansion in the sector’s absorptive capacity—something that Prime Minister Manmohan Singh has acknowledged.

Economists, however, warn against a slowdown from the current second quarter onwards. The United States raising Fed rate to 1.25 per cent indicates a contracting global economy. Already, inflation at home is touching six per cent, higher than the bank rate, and if rates firm up, the government’s borrowing costs will shoot up. And the talk of big jumps in plan outlays doesn’t help the worried financial climate. The fiscal deficit is already on an upward curve thanks to rising expenditure.

Add the rising invisible earnings ($25 billion) which has helped double the current account surplus to $8.7 billion, and it’s clear that the good doctor and finance minister P. Chidambaram’s biggest challenge is now to bolster investment and utilise idle resources. For that, again, continued reforms is a must.

The Glow Is Here

By Paromita Shastri