 |
By Rajesh Kumar Singh
NEW DELHI (Reuters) - The economy will begin improving in June as fiscal and monetary steps taken by authorities start taking effect, a senior official said on Thursday.
But he warned that the pace of growth may not be the same as in the previous three years
"I expect that March-April-May, you will find this impact of these stimulus packages beginning to have an impact on the economy," Trade Secretary Gopal K. Pillai said addressing an India-US industry summit.
"In the Department of Commerce, we are quite confident that by June, we would turn the corner and start to improve. May not be at the same pace as we did between 2004 and 2008."
Asia's third-largest economy is expected to grow at 7 percent or less in the year to March due to declining exports and moderating domestic consumption, compared with 9 percent or higher in the last three years.
India has already announced two fiscal stimulus packages to spur demand in its economy, which is experiencing a slowdwon amid the worldwide downturn and high borrowing costs at home.
The central bank has also cut its key short-term lending rated by 350 basis points in the last five months to an 8-½ year low of 5.5 percent.
Pillai said measures taken for the infrastucture, housing and auto sectors are "slowly" beginning to have an impact.
He added that the country's economic recovery will be underpinned by the agriculture sector, which he expects will grow at 4 percent this fiscal.
The comments followed recent data that has pointed at more pain for the economy.
Data on manufacturing activity in January indicated a contraction, while exports fell for the third-straight time in December.
Companies say high rates, along with depleting credit sources, have hit their expansion plans and crimped profitability.
In addition, India's Ministry of Labour on Tuesday said that during the December quarter about half a million jobs were lost in sectors that accounted for more than 60 percent of the country's GDP last fiscal.
CAclubindia
