India to see 8% growth this fiscal despite Q1 slowdown

Yoshita Singh
New York (PTI) - Indian Finance Minister Pranab
Mukherjee Thursday expressed confidence that India will be
able to achieve 8 per cent growth this year, even as he noted
that the global economic environment remains an area of
concern.
"We will have 8 per cent growth even this year, though
the first quarter growth figure is 7.7 per cent," he told
reporters here after meeting leading Indian industrialists at
an investment forum.
He said a good monsoon could ensure agricultural growth
of about "4 per cent-plus" and growth in the manufacturing and
service sector "clearly indicates that it will be possible for
us to have the growth at around 8 per cent for this year".
Mukherjee said India has projected 9 per cent growth for
the 12th Five-Year Plan (2012-17) and the country is taking
necessary steps to ensure that the momentum continues.
On the outlook for the rupee, he said the Reserve Bank of
India is "watching the situation".
"The RBI Governor has made it quite clear that as and
when the situation warrants, the RBI will intervene. Right
now, there is no such situation," he added.
Mukherjee pointed out that the international environment
is an "area of concern", particularly the high ratio of
sovereign debt to the GDPs of euro zone nations and the slow
pace of recovery in industrialised countries.
He added that inflationary pressure and forex volatility
in emerging markets is "posing serious concerns, but at the
same time, as the collective leadership of the international
community has been able to address the problems (that) arose
out of 2008 crisis, we will be able to overcome this current
crisis," ensuring that India's growth will be 8 per cent-plus.
Mukherjee will be in Washington for the IMF and World
Bank's annual meeting as well a meeting with his counterparts
from the BRICS (Brazil, Russia, India, China and South Africa)
grouping, where the countries would review the global
situation and try to work out a common approach to issues that
will be debated in the IMF-World Bank meeting.
"We will also discuss our strategy in respect of the euro
zone crisis," he added.
He said the BRIC leaders would exchange views and these
will be reflected in a communique that is currently being
drafted.
Later, speaking at a USIBC event, Mukherjee said no
country has remained immune to the fallout of the global
financial crisis in 2008.
Though the economic downturn was moderated and growth
resumed in the second half of 2009 in most economies, the pace
of recovery remained uneven.
Advanced economies grew more slowly than before, while
fast emerging economies like India and China showed the way
for the rest of the world.
"There is wide-spread apprehension that even the tepid
global economic recovery that we have seen so far is stalling.
Slowing global aggregate demand, the unresolved euro debt
crisis, high commodity and oil prices, inflationary pressures
and stressed currencies have shaved 1-1.5 per cent off the
global GDP in the past 6-8 months," he said.
He added that inflationary pressure and forex volatility
in emerging markets is "posing serious concerns, but at the
same time, as the collective leadership of the international
community has been able to address the problems (that) arose
out of 2008 crisis, we will be able to overcome this current
crisis," ensuring that India's growth will be 8 per cent-plus.
Mukherjee will be in Washington for the IMF and World
Bank's annual meeting as well a meeting with his counterparts
from the BRICS (Brazil, Russia, India, China and South Africa)
grouping, where the countries would review the global
situation and try to work out a common approach to issues that
will be debated in the IMF-World Bank meeting.
"We will also discuss our strategy in respect of the euro
zone crisis," he added.
He said the BRIC leaders would exchange views and these
will be reflected in a communique that is currently being
drafted.
Later, speaking at a USIBC event, Mukherjee said no
country has remained immune to the fallout of the global
financial crisis in 2008.
Though the economic downturn was moderated and growth
resumed in the second half of 2009 in most economies, the pace
of recovery remained uneven.
Advanced economies grew more slowly than before, while
fast emerging economies like India and China showed the way
for the rest of the world.
"There is wide-spread apprehension that even the tepid
global economic recovery that we have seen so far is stalling.
Slowing global aggregate demand, the unresolved euro debt
crisis, high commodity and oil prices, inflationary pressures
and stressed currencies have shaved 1-1.5 per cent off the
global GDP in the past 6-8 months," he said.
Mukherjee further said the RBI has given clearance to the
guidelines for an infrastructure debt fund, which he had
announced in the annual budget.
The guidelines have been approved by SEBI as well as the
RBI.
"The RBI and SEBI will regulate the infrastructure debt
funds," he said.
Pointing out that India's infrastructure sector will
require huge investments worth about a trillion dollars over
the next five years, Mukherjee said 50 per cent of that
investment will come from the private sector.
"By providing sanctions and other clearances
expeditiously, making procedural and regulatory aspects
transparent, we are issuing the guidelines that will address
the problems and concerns of prospective investors," he said.
Mukherjee noted that his top priority in the coming
months is to get a few legislations approved by both Houses of
Parliament, "which will make a sea change and will unleash a
second generation of reform."
He said he was interested in pushing through an amendment
to the Constitution that will facilitate the introduction of a
uniform Goods and Services Tax across the country.
Mukherjee expressed hope that other legislations, which
will facilitate more investment from abroad in sectors like
insurance and banking, would get approval from Parliament in
the forthcoming Winter Session so that he can include
appropriate provisions in the next Budget.
"We are working to build a policy consensus on a number
of pending issues, such as introduction of goods and services
tax, a new national manufacturing policy, further
liberalisation of FDI, including retail and strengthening
financial markets for long-term investments," he said.
In this regard, he noted that with respect to FDI in the
pharmaceutical sector, some decisions will be taken shortly,
as the Prime Minister has called a meeting on the issue next
month.
On the US-India civil nuclear agreement, Mukherjee
indicated that in light of the apprehensions raised by
concerned parties in respect of the Civil Nuclear Liability
Bill, there was a possibility of these being addressed in the
final Act passed by Parliament.
"We have consulted our lawyers who say that the concerns
could be addressed by framing the (appropriate) rules under
the main Civil Nuclear Liabilities Act," he said.
He said India is ready to have consultations with other
legal experts to get the appropriate legal language.
"Whether it is the US Congress or the Indian Parliament,
a multi-party democratic system has its own way of functioning
and the political executives will have to constantly make
efforts to ensure that they can reach a consensus among the
various stakeholders," Mukherjee said.
"It takes time to build up the consensus and bring
convergence and so, the legislative process gets delayed," he
said.