Sinha sees recovery by mid-2002, pins hopes on agricultural sector

Our Economic Bureau

New Delhi, Nov 27: Finance minister (FM) Yashwant Sinha on Tuesday said the economy would start looking up by the middle of the next year and hoped that agriculture would play a major role in boosting growth.

Responding to supplementaries during the question hour in the Rajya Sabha (RS) on Tuesday, the FM said a growth of 4.5 per cent had been projected by the International Monetary Fund. India would be among the fastest economies in the world, second only to China where growth had been pegged at 7.5 per cent, he added.

The minister also said agriculture growth rate was a major contributor to the economy and hoped for a better contribution this year than in the previous two years. While it was 0.7 per cent in 1999-00, it was still lower at 0.2 per cent in 2000-01, he added. The government was aware of the impending slowdown while presenting the Budget this year and took a number of steps in advance, Mr Sinha explained.

As part of the broad strategy for promoting economic growth, various tax reform measures were taken to promote greater investment and consumption demand, he said. Emphasis was also laid on faster implementation of Central Plan outlays and completion of projects for key infrastructure sectors and on promotion of capital investment in the private sector as well, he added. Also, the RBI further reduced bank rate from 7 per cent to 6.5 per cent, rationalised the CRR for banks and reduced the maximum interest rate chargeable on export credit, the FM said.

Disagreeing that the growth of 4.4 per cent in the first quarter of the current fiscal was the lowest, Mr Sinha said it was better than 3.8 per cent recorded during the last quarter of the previous fiscal.
In order to give a boost to economic growth, the minister said he had requested his colleagues in the infrastructure sector ministries to spend the budgetary allocations as speedily as possible. The government was even prepared to provide supplementary allocations to them, he said, adding Rs 60,000 crore had been earmarked for the infrastructure sector in the Budget.

He said ambitious projects in the road sector, rural development and rural employment were expected to shore up the economy. Mr Sinha also said more steps had been taken in the aftermath of the September 11 attacks “and by the middle of next year things will start improving.”