India’s economic growth and investments will pick up in the second half of the current financial year after slumping to a near nine-year low of 5.5 per cent in the April-June quarter, Finance Minister P Chidambaram said on Monday.
“Growth Domestic Product (GDP) growth was 5.5 per cent in the first quarter. I expect it to be better in coming quarters,” the finance minister said at the annual Economic Editors’ Conference in New Delhi.
Chidambaram said investments are likely to pick up in the third and fourth quarter of the current financial year following the recent economic reforms measures announced by the government.
He said domestic as well as foreign investments would help boost economic growth. “Once domestic investments pick up and the foreign investments come in, the situation will improve.”
Chidambaram said the government would take all possible steps to improve business sentiments and boost investments.
“I am going to do my best to help bring the change,” he said. The finance minister admitted that GDP growth in the current financial year would fall below the budgetary target of 7.6 per cent, largely due to adverse global economic climate. However, he emphasised that India, despite some slowdown, would remain among the fastest growing economies in the world.
“Even though Indian economy’s growth declined to 6.5 per cent in 2011-12 and further to 5.5 per cent in the first quarter of this fiscal, it is no cause for undue worry.
Even if we fall short of 7.6 per cent target, our growth will be four times the average growth of advanced economies and twice the average growth of global economy,” finance minister said. “Our foremost task is to augment savings, and then challennelise these savings into investments,” the finance minister said, assuring every step possible to put the Indian economy back on the high growth path. “India’s growth story remains strong.”
Minister of State for Finance Namo Narain Meena, Finance Secretary RS Gujral were also present at Economic Editors’ Conference 2012 in New Delhi.
Chidambaram said India fared better than the global economy, which saw the growth drop from 5.3 per cent in 2010 to 3.9 per cent and 3.5 per cent during the next two years. The advanced economies also logged a growth 3.2 per cent, 1.6 per cent and 1.4 per cent.
“India was not immune,” he said, adding: “It will do well to remember that out of eight years it is only during two years - 2008-09 and 2011-12 - our economy grew at less that 7 per cent.”
He said the tight monetary policy of the Reserve Bank of India (RBI) to tame inflation had dampened growth. “But there is no cause for gloom or despondency.”