Manmohan Singh says the Indian economy, hurt by the global crisis and a local drought, will return to robust growth next year
The Indian economy will clock robust growth from the last quarter of the current fiscal as the impact of truant monsoon rains and the
global economic slowdown ebbs away, a meeting of the Planning Commission in the Capital chaired by Prime Minister Manmohan Singh said on Tuesday.
After the meeting, which assessed the economic situation in the country and the implementation of the integrated energy policy approved last December, Mr. Singh said, "The underlying strength of the economy will stand us in good stead as we seek to return to our high growth target over the next two years."
While more than 40% of the country is reeling under drought, the prime minister said there is no need to be pessimistic about growth. "We should not be over-pessimistic. We are in a very strong position to manage the consequences of drought," said an official statement quoting Mr. Singh.
While briefing the media after the meeting, Planning Commission deputy chairman Montek Singh Ahluwalia said economic growth in the second and third quarters may fall below the 6.1% recorded in the first quarter. The panel is projecting a GDP growth rate of 6.3% for the current fiscal year and a growth rate of 8% in the coming fiscal before the economy returns to 9% growth in 2011-12.
These growth projections factor in a pickup in overseas demand and normal monsoon rains next year. Exports, which comprise more than 15% of the GDP, has been contracting for the last 10 months.
The discussion has drawn attention to the need to revive investments, especially in infrastructure, and contain fiscal deficit—the gap between the government's receipts and spending—within limits of prudence. The government's fiscal deficit target for the current year is 6.8% of the total economic output of the country.
The Planning Commission called for a bold and clear disinvestment programme to meet the resource gap in the next two fiscal years. The meeting also underlined the need for expanding the scope of public-private partnerships to include projects in social sectors such as health, education and urban development.
The panel also assessed the implementation of the integrated energy policy. India is making efforts to acquire uranium assets in Kazakhistan and Mongolia to bridge gaps in the supply of fuel for its nuclear power plants, it said. It also recommended that prices of petrol, diesel, gas and coal should be freed or linked to the international market.