The Indian and Chinese economies have fared relatively well in this recession that swept the world. That is one reason to cheer as the Chinese economy, in particular, proved to be a safe haven for many multinational organisations that had a tough going in the United States and European markets. The West is still languishing under the weight of the downturn, as the best predictions indicate a recovery towards the end of 2010. Peaking unemployment rates and cost cutting measures have been all that seem to be in the air in the corporate sector and in the economic news.

In the light of this scenario, it is pleasant news that the Indian Finance Minister, Mr Pranab Mukherjee, has indicated that the Indian economy could grow by as much as 8% the fiscal year. The markets, which were getting ready for a downward trend in the browses, were perked up by the statement and the sensex saw an immediate hike by over 500 points. A growth rate of 5 – 6% was what was in the offing; now, if that could be revised upwards to 8% and above, that would mean that the Indian economy has effectively defied gravity and would spread cheers all around the world with its radiance!

However, how plausible is the statement that the economy could grow by 8%? Yes, India has been growing – and that in itself is a sign of relief. But to grow at over 8%, there are two sectors that need to perform to potential –the exports sector and agriculture.

Indian Agriculture has by no means been the star of the year so far, with the monsoons having played spoilsport. The late monsoons led to draught in a few Indian states, followed by torrential rains that led to floods. The unpredictable nature of monsoons means that agriculture wouldn’t be able to live up to the expectations. Already, prices in India are reigning high when it comes to essential commodities of cereals, vegetables and pulses, while there is speculation that hoarding could be a main reason for the spike. So, could agricultural output match expectations?

The other factor, Indian exports, doesn’t depend on the state of the Indian economy – it depends on how well the global economy fairs, and definitely, on growth rates and demand in the US and Europe. But the two regions do not show any appetite that India could be optimistic about.

With export prospects taking more time and with agriculture already having been affected by monsoons, the Indian Finance Minister’s statement would only have to be taken with a fistful of salt.