“In 2-3 years’ time, economy will return to the robust growth path of 7-8 per cent”

Prime Minister Manmohan Singh on Wednesday said the country would return to the robust growth path in the next two to three years.

Making an intervention in the Lok Sabha during question hour, Dr. Singh said the government had taken a number of steps in this direction, adding that “nothing is achieved by dampening the spirit.”

Admitting that there has been a slowdown in the economy in the last two years reflected in the GDP figures, the Prime Minister said the Economic Survey for 2013-14, the Finance Minister in his budget speech, and he himself in the intervention during the course of reply to the President’s Address, had explained at length the factors that were responsible for it.

“There are international factors; there are two crises in the international system — one was the banking crisis of 2008-09 and then, there was the Euro Zone crisis of 2011. These things do affect our economy, but there are other factors also. There have been some domestic factors and we are trying to tackle all these problems. I would urge this House that nothing is achieved by dampening the spirit of our people; although we are in difficulties, we are confident,” Dr. Singh explained.

“As the Finance Minister mentioned in his Budget Speech, we are confident that in 2-3 years’ time, we will return the economy back to the robust growth path of 7-8 per cent,” he said.

Earlier, Shahnawaz Hussain (BJP) and Gurudas Dasgupta (CPI) had demanded that the Prime Minister reply to questions on the slowdown of economy and not Minister of State for Planning Rajiv Shukla as he was “not an economist.”

Later, replying to another question, Finance Minister P. Chidambaram refuted the Opposition’s claim that India remained unaffected by the global financial crisis of 2008. He said the government had worked out a package of measures to restart the growth engine.

“The crisis of 2008 did not end in 2009. It deepened in 2011-12. It continues to envelop the whole world. We cannot be unaffected by these crises,” he said, adding, 44 per cent of the GDP comprised imports and exports and eight per cent was capital inflows and outflows.

“It is not a correct assessment that we were not affected by the 2008 banking crisis. The government gave stimulus packages for three years which gave us high growth. But this resulted in increase in fiscal deficit which in turn led to high inflation. Inflation increases when the FDI increases,” Mr. Chidambaram said.

The Finance Minister said the consumer price index (CPI) of the inflation that affected the people, was high at over 10 per cent because the government had increased the minimum support price for foodgrains.

While the core inflation or wholesale price index had come down, the CPI was high at over 10 per cent. “CPI is driven by food inflation. Cereal inflation is high because of high MSP, pulses inflation is high because of demand and supply gap,” he said.

“We are trying to pump in more pulses. No government has doubled the MSP in five years. The NDA government had hiked MSP at the rate of Rs. 10 per year,” Mr. Chidambaram said.

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