INDIA’S economy can “recapture the magic” and return to high-growth of seven-to-eight per cent in the next couple of years, picking up from decade-low expansion, the finance minister said on Saturday (February 9).
Earlier in the week, India’s Central Statistics Office (CSO) had projected that Asia’s third-largest economy will accelerate by five per cent in the fiscal year ending in March – its slowest rate in 10 years.
“There are signs of an upturn that will take us to a high growth path,” Finance Minister P Chidambaram told reporters.
“We will climb back to a growth rate of between six to seven per cent next year and then between seven-and-eight per cent in the year after,” he said.
“We can recapture the magic of 2004-08. The average growth was 8.5 per cent during that period,” he said.
The finance minister disputed the CSO’s growth estimate of five per cent for the current financial year as too low.
“We believe growth will be closer to 5.5 per cent,” Chidambaram said, as he unveiled a scheme to draw more investors into India’s growing stock market.
The International Monetary Fund last week forecast India’s economy would post growth of 5.4 per cent in the financial year ending in March.
Last year, the economy grew by 6.2 per cent but even that rate, while enviable by anaemic Western standards, is insufficient to create the jobs India needs to provide work for its ballooning population.
An eight per cent growth rate is imperative to generate jobs, Chidambaram said.
“The measures we have taken… and will take in the coming days will put India onto the eight per cent path,” said the minister, who is due to present the budget for the coming financial year at the end of the month.
The Congress-led coalition government has introduced a string of measures since September to encourage foreign investment in key sectors and reduce subsidies, which have led to a ballooning fiscal deficit.
India’s economy has slowed sharply due to high interest rates, Europe’s debt crisis and sluggish investment caused by domestic and overseas concerns about policy-making and corruption.
On a positive note, Chidambaram said the CSO’s growth forecast was higher than a decade ago in 2002-03 when the economy grew at four per cent.
“I have no doubt in my mind that we will come out of this trough,” he said.
As India gears up for national elections due in 2014, the government is under increasing pressure to kick-start the economy before facing voters.
