Budget measures to ensure 9 per cent growth this fiscal: Pranab

The measures initiated in the union budget for 2010-11 would help revive private investments and put the economy back on a 9 per cent growth rate, finance minister Pranab Mukherjee said on Friday.

He said the GDP growth rate at 7.2 per cent for 2009-10, which has been "impressive" by international standards, is expected to climb to 8.25-8.75 per cent in the current fiscal.

Speaking on the sidelines of the Small Industries Development Bank of India's foundation day celebrations, Mukherjee said the measures in the budget that would help revive private investments include enhancing allocation to the micro, small and medium enterprises (MSME) sector to Rs2,400 crore, increasing the limit for presumptive taxation, raising the threshold for compulsory auditing of accounts of small businesses, extension of interest subvention for exports in certain sectors and exemption from capital gains tax to facilitate conversion of small businesses to the limited liability partnership (LLP) format.
 
Elaborating on the role of micro finance, the finance minister said it has emerged as a new channel of economic empowerment and attainment of the government's 'millennium development goals'. "The government aims to double credit flow to the MSME sector within five years," he said and promised to implement recommendations of a report of the prime minister's task force on MSMEs.

Last year was a difficult one as the world was still in the throes of the financial crisis, Mukherjee said.

"The good news is that the world economy today seems to be recovering from the meltdown of 2008-09," he said, adding that the fast recovery of the Indian economy underscores the effectiveness of the policy response of the government in the wake of this financial crisis.

The finance minister's growth forecast for 2009-10 is in line with the projection made by the Central Statistical Office, although it is lower than the 7.5 per cent forecast in the Reserve Bank of India's policy review in January.
 
Prime minister Manmohan Singh had also said at a recent function organised by the RBI that the economy would get back to 9 per cent growth by the end of the eleventh five-year plan period, and do even better after that.

After clocking a growth of over 9 per cent for three consecutive years till 2007-08, the country's GDP grew by a relatively modest 6.7 per cent in 2008-09 on account of the international financial crisis.