Mumbai, Feb. 9: Finance minister P. Chidambaram today picked holes in the 5 per cent growth forecast made by the Central Statistical Organisation (CSO) and expressed confidence that the economy would expand by around 5.5 per cent in 2012-13 because of the upturn seen in the second half of the fiscal.
According to Chidambaram, the economy is now witnessing slow recovery, and the growth rate will improve to 6-7 per cent in the next fiscal and 7-8 per cent in the year after.
The Centre will announce measures in the remaining weeks of this fiscal and in the next year to take the growth rate to 8 per cent.
The finance minister said the CSO's projection was based on "dated" data. "The CSO extrapolated data for the previous April and November into the year. That would be normally correct when the trend continues in the same direction. But when the trend changes, extrapolation is not the method that a statistican should follow to project the future," he pointed out.
The finance minister said there were signs of upturn in the economy. Though the growth pace is slow, it will help the economy achieve a growth rate of of 5.5 per cent in the current fiscal. However, while a 5.5 per cent growth rate was satisfactory, an 8 per cent growth rate was imperative, he added.
He accepted that the Indian economy was challenged but was confident that the country would come out of the trough.
India is still the fastest growing economy in the world after China, the Philippines and Indonesia, Chidambaram said.