Union Finance Minister Pranab Mukherjee on Saturday allayed fears of panic in the wake of the downgrading of the U.S. rating and asserted that India would post the same growth rate in current fiscal as in the previous year and grow as an investment destination regardless of the negative global sentiment.
In the course of his speech at a CII function and during his brief interaction with journalists, Mr. Mukherjee said the downgraded sovereign rating of the U.S. would have its adverse impact on the globe, including India, but there was no need to press the panic button.
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India was assessing the impact. The Indian markets were resilient enough to weather the storm of negative sentiments affecting the world. The country would continue to achieve appreciable growth defeating the negative environment. “Our growth story is intact and the fundamentals strong,” he said.
Referring to how negative emotions affected the Indian markets on Friday, Mr. Mukherjee pointed out how they recovered eventually because of their resilience.
India would continue to grow as an investment destination for global investors. Measures had been taken to make the market more attractive, robust and vibrant, he said.
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Expressing concern over the decreasing optimism in the economy among Indian industry, Mr. Mukherjee assured the captains of industry that the country would continue to sustain the high rate of 8 to 9 per cent growth rate over the next few decades due to high saving-investment ratio, young working age population, rising middle class income and rapid progress in infrastructure.
Inflation, a challenge
The Minister admitted that inflation was a challenge in the short-term. Monetary measures might moderate the growth rate, he noted and expressed confidence of repeating the growth performance of 2010-11. Future reforms would be in the areas of improving economic efficiency and ensuring equitable growth, thrust on education, health and sanitation, additional 3 to 4 per cent investment on infrastructure, addressing issues of land acquisition and environment clearance and rehabilitation and resettlement, and deepening the policy reforms in the financial sector and addressing the gaps in the overall economic regulatory architecture.
In the next few days, the Group of Ministers (GoM) would take up for consideration issues relating to reconciliation of environmental concerns emanating from various development activities related to infrastructure and mining and to examine the efficacy and legality of existing forest clearance norms and procedures being followed, the B.K. Chaturvedi report on the coal sector, the Vinod Dhall committee report on ‘Public Procurement Standards and Public Procurement Policy' and Ashok Chawla committee report on allocation and pricing of natural resources.
Mr. Mukherjee said the government was considering proposals to provide tax concessions for gas exploration.