India, the world’s second fastest growing major economy, has called the global investor community to participate in the growth story saying the country was poised to expand by 9 per cent.
“In the short term it is reasonable to expect that the (Indian) economy will go back to the robust growth path of around 9 per cent average”, he said addressing the seventh India Investment Forum meeting on Wednesday.
Recalling how the country managed to withstand the impact of global financial meltdown, which pulled down the economic growth to 6.7 per cent in 2008-09 from 9 per cent in the preceding three years, Mr. Mukherjee told the global investors that “India presents an opportunity for investment that you cannot afford to miss.”
India’s economic growth rate was 7.4 per cent in 2009-10 and is expected to be over 8.5 per cent during the current fiscal. From over 9 per cent average for three years till 2007-08, growth slipped to 6.7 per cent in 2008-09 owing to the global economic crisis.
Pointing out that GDP was 8.8 per cent in the first quarter (April-June 2010), Mr. Mukherjee said, “There has been a revival in investment and private consumption demand, though the recovery is yet to attain the pre-2008 momentum.”
The International Monetary Fund has projected the Indian economy to grow by 9.7 per cent in 2010, driven by robust industrial production and macro-economic performance.
The Minister further said that Indian exports were recording “impressive growth” since November-December 2009 and seen a substantial pick up in corporate earnings and profit margins.
Besides improvement in capital flows and business sentiments, he said, “The manufacturing sector has been showing a buoyancy reminiscent of the pre-slowdown years.”
Stressing that economic recovery is broad—based, Mukherjee said, “The challenge now is to quickly revert to the high GDP growth path of an average 9 per cent plus and even find means to cross the double digit growth barrier in the coming year or two.
The government, he added, would endeavour to address weaknesses in governance with focus on improving the public delivery mechanism.
He further added that government had been withdrawing the fiscal stimulus in a calibrated manner and would move towards the path of fiscal consolidation in the coming years.
“There has been renewed effort to tackle the growing burden of fertiliser and petroleum subsidies,” he said.
Referring to the issue of opening up of retail sector for foreign investment, Mr. Mukherjee said, “The government has also started stakeholder consultations on opening up sectors such as multi-brand retail and defence production to greater FDI inflow.”
On strengthening regulatory framework, he said the government would soon be setting up an apex-level Financial Stability and Development Council (FSDC) with a view to maintaining financial stability.
“Without prejudice to the autonomy of regulators, this Council would undertake macro prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory issues”, he said.
Reserve Bank has been raising concerns about the dilution of its autonomy because of the measures being taken by the government.
The Finance Minister further said the government would also be setting up a Financial Sector Legislative Reforms Commission (FSLRC) to streamline financial sector legislations.
The FSLRC, he said, would “rewrite and clean up the financial sector laws and bring them in line with the requirements of the sector.”
The Finance Minister also informed the global audience that Reserve Bank of India (RBI) was considering giving more banking licences to the private sector players.
The move would further diversify the Indian banking scenario and environment, he said, adding that “future reforms in this area (would) be guided by progress on adequate mechanism and systems to prevent the possibility of sudden external contagion.”
Greater say in IMF
Meanwhile, India pitched for increasing the voting power of emerging economies in the International Monetary Fund by 5-6 per cent, which will give developing countries a greater say in how the 186-nation Fund is run.
“Quota reforms in IMF is one of our basic objectives...we want at least 5 to 6 per cent quota should be increased in IMF and emerging market economies of the world should have their shares,” Mr. Mukherjee told PTI here on Wednesday.