Finance minister P Chidambaram said India would end 2008-09 as the second-fastest growing economy in the world at 7%-plus. The minister?s confidence is based on an analysis of the impact of the global financial crisis on 15 sectors carried out by his ministry and released at the annual Economic Editors? Conference on Monday.

These five sectors?including agriculture, mining, trade & recreation and communication–with a weight of 42.9% in GDP would suffer no impact, says the study. Furthermore, community and social services would actually benefit.

The government is thus confident that around 57% of India?s GDP value-add would be left unscathed by the global recession. According to the study, sectors that would be moderately impacted are manufacturing, exports, insurance & banking, construction, transport, business services and real estate. They have a weight of 43.5% in GDP.

Addressing the media, the minister said, ?There is a silver lining to this crisis. While insulating ourselves to the extent feasible from adverse changes in the global economic environment over the next few years, we have to seize the opportunity to review and revisit pending reforms.?

Hopeful that the worst is over for inflation, as it came down to 8.9% for the week ended November 8 after falling for the second consecutive week, he said if this decline continued, it would result in a moderation of policy rates and deepening bias in favour of growth.

The finance minister said, ?As and when required, we must introduce measures, particularly in the financial sector, to make our economy more competitive and the economic regulatory and oversight system more efficient, quick and responsive to global developments.?

Highlighting that the growth estimate for the first quarter of 2008-09 was 7.9% and that the second quarter would ?undoubtedly? show high positive growth, the minister said, ?We must banish the thought of recession.? A recession is two successive quarters of GDP contraction.

At a disaggregated level, the finance ministry report adds that while the pressure on consumer durables would have a moderating effect on domestic consumption demand, the slow increase in credit would harm it.

However, it noted that the effect of the financial crisis would hardly impact trade and recreation–comprising 15.4% of GDP in 2006-07–as sales growth continues to be buoyant. “Q2 expected sales growth of manufacturing at 36% is higher than 8.8% in Q2 of 2007-08,” the study said.

But the report has warned that non-performing assets in the insurance & banking sector would increase. On interest rates, Chidambaram referred to the fact that several public sector lenders had already cut their home loan rates by up to 75 basis points, but added, “I cannot give any advice to private sector banks (on reducing rates).”

The minister indicated that the government would take a year more to meet its revenue deficit target, but stressed that the government considers fiscal consolidation a priority.

Though the government was plug the revenue deficit and limit the fiscal deficit to 3% of GDP by this fiscal end under the FRBM Act, the farm loan waiver and hike in wages for its employees made that difficult to achieve. The government had a deficit target of 2.5% of GDP.

If oil prices stay at the present levels of around $51 a barrel, the Centre may not have to issue more oil bonds to public sector oil companies until this fiscal end, Chidambaram said. When oil prices went up to $150 a barrel, the government had compensated these companies with bonds for retailing petrol and diesel at below cost price.