Pinning hopes on revival of business confidence and strong fundamentals, Finance Minister Pranab Mukherjee on Saturday said the Indian economy would return to the pre-global crisis growth path in the coming years.
“...Strong fundamentals of our economy will help us return to a sustained growth path of pre-2008 crisis level in the coming years,” he said while addressing a press conference in Manila after taking over as Chairman of the Board of Governors of the Asian Development Bank (ADB).
India was growing at over 9 per cent before the global financial crisis of 2008 pulled down the growth rate to 6.7 per cent in 2008-09. India has projected a growth rate of 7.6 per cent in 2012-13, up from 6.9 per cent recorded in the previous fiscal.
Mr. Mukherjee said that despite the impact of eurozone debt crisis on the economy, “India has continued to be a front-runner in terms of economic growth in the region, which underlines the resilience of the Indian economy.
“The Indian economy is more resilient than many other nations to withstand this fresh round of global economic turmoil, as the bulk of India’s GDP is domestic demand driven,” he added.
Mr. Mukherjee said the crisis had impacted the Indian economy through low growth, weak business sentiment, declining capital inflows and exchange rate and stock market volatility with attendant implication for investor confidence.
The Minister also added that India has remained successful in maintaining external debt at sustainable levels and its “banking sector is robust and our regulatory architecture is mostly in place”.
Mr. Mukherjee said, “We have managed to maintain a growth rate of 6.9 per cent in 2011-12 with continued emphasis on inclusive growth. Steps are being taken to meet the fiscal deficit,” Mr. Mukherjee said.
He further said that in the Budget for 2012-13, efforts were made for “strengthening domestic growth drivers, encouraging private investments to regain its pre-2008 crisis growth momentum and addressing supply constraints in infrastructure and agriculture sector”.
Referring to the Reserve Bank’s decision on April 17, 2012 to reduce policy rates for the first time, after a gap of nearly three years, he said, “I hope this will help in investment revival and contribute to strengthening of business sentiments.
“On the fiscal front, we are committed to bring down the subsidy bill below 2 per cent of GDP in 2012-13 and to 1.75 per cent of GDP in next three years,” he added.
The government, Mr. Mukherjee said, had taken several steps to shore up the short and medium term growth prospects which include gradual liberalisation of capital market and encouraging capital inflows through FIIs, FDI and External Commercial Borrowings, especially for infrastructure financing.