GDP will be close to 9 pc, inflation to be stable: FM

New Delhi, Nov 30: Finance Minister P Chidambaram today said the GDP growth rate would be close to 9 per cent in the current fiscal and inflation would remain ''more or less at the current level'' of 3.2 per cent.

''We are not planning for a double digit growth this year'' because of the ''turbulence'' in the international market, Mr Chidambaram told reporters who sought his reaction to the second quarter GDP growth rate of 8.9 per cent.

Asked about the possible impact of the rising prices of crude and other commodities in the global market on inflation, the Minister said the government and the RBI had taken several monetary and fiscal steps and ''we stand ready to take further steps, if necessary''.

Going by the current trend, inflation would remain more or less at the current level, he said.

Mr Chidambaram said the downside of the growth figures was the slowdown in manufacturing, largely attributable to the slowdown in the consumer durable sector. There was also a slowdown in the category of hotels, transport and communication, he said. The upside included agriculture which clocked 3.8 per cent in the first quarter and 3.6 per cent in the second, up from 2.8 per cent and 2.9 per cent respectively in the corresponding periods of the last fiscal.

Agriculture was expected to finish about 0.75 percentage points higher this year, he said. Mining and quarrying were also doing very well at 7.7 per cent growth, besides electricity, gas and water supply at 7.3 per cent.

Further, the gross fixed capital formation was higher 30.3 per cent which meant that investment continued to be a driver of growth.

Mr Chidambaram observed that the capital goods sector was buoyant, construction was very buoyant and with GFCF at 30.3 per cent, ''my conclusion is that the buoyancy in investments remains intact''.

Secondly, private consumption expenditure also recorded a 5.7 per cent growth, showing a sustained improvement in the standard of living of the people.

''Altogether, my conclusion is that despite the slowdown in manufacturing, GFCF and sustained rate of investment gives me the confidence that the year will end with a growth rate close to 9 per cent.'' ''With some luck, it can be on the right side of nine'' per cent, the Minister said.

The government was having a ''tighter monetary stance'' because the commodity prices were high and crude prices were spiralling.

''All this points to some moderation (in the GDP growth). Last year, it was 9.4 per cent. I will be happy if we finish with 9 per cent. Let us not talk about double digit growth. Nine per cent is still a very good growth rate,'' Mr Chidambaram said.

Asked about further export incentives, he said, ''We will see.

Yesterday, we announced some incentives for exporters. If the interest rate remains stable or if it decline marginally, that is some help to the exporters.''

UNI