Prime Minister hopes that the economy will rebound as government was taking all steps to boost investments.
With global economy not doing well, Prime Minister Manmohan Singh on Friday said it may not be possible to achieve growth target of 6.5 per cent for the current fiscal envisaged in February.
However, he hoped that the economy will rebound as the government was taking all steps to boost investments.
“I would not like to make a forecast of what our growth will be in the year 2013-14. The IMF has recently reduced its earlier projection of growth rates for all countries including India, for 2013,” he said at a function in New Delhi.
“We had targeted 6.5 per cent growth at the time the Budget was presented. But it looks as if it will be lower than that,” he said.
Pinning hopes on the agriculture sector, the Prime Minister said plentiful rains so far will help revive demand in rural areas which will contribute to stronger industrial performance in due course.
“Industrial growth has not yet recovered. However, I am happy to say that agriculture looks well set to show a good performance,” he said.
The country’s economic growth has hit a decade low of 5 per cent last fiscal on account of poor performance of farm, manufacturing and mining sectors.
Highlighting the UPA regime’s performance, Dr. Singh said the average growth rate during eight years (2004-05 to 2012-13) was 8.2 per cent. This is much better than 5.7 per cent achieved in the previous eight years.
He also said that the real wages have risen much faster rate of 6.8 per cent per year in the 11th plan period as compared to an average of 1.1 per cent annually in the 10 years preceding it.
Emphasising that percentage of the population below the poverty line declined at a much faster rate of 2 per cent between 2004-05 and 2011-12, he said, the rate however was just 0.75 per cent before 2004-05.
“I think this is a record that any government can be proud of. I agree we have had one bad year. I assure you we will get out of it... I assure you we will leave no stone unturned to ensure that our economy rebounds,” he said.
Expressing concern over high current account deficit (CAD), he said the government will use all policy instruments available — fiscal, monetary and supply side interventions — to ensure reduction in the deficit, which has touched 4.7 per cent last financial year.
“Ideally we should bring the CAD down to 2.5 per cent of our GDP. It is clearly not possible to do this in one year, but I expect that the CAD in 2013-14 will be much lower than the 4.7 per cent level recorded last year. It will decline further next year,” he said.
He exuded confidence that the government will meet fiscal deficit target for the current fiscal.
“I feel we can and we should remain optimistic. The basic fundamentals of our economy are sound and healthy. We have been taking all possible measures to correct imbalances on the macro front,” Dr. Singh added.
The fiscal deficit, he said, which is the accumulated effect of the fiscal stimulus given in the past, had expanded and it needs to be reduced.
Union Finance Minister P. Chidambaram has targeted fiscal deficit of 4.8 per cent of GDP in the year 2013-14 and announced continuing reductions of about half a percentage each year subsequently, up to 2016-17.