New Delhi: In an attempt to dispel fears of a domestic slowdown, Prime Minister Manmohan Singh on Friday said that the Indian Economy could sustain close to 9% growth, reiterating the government’s target for average expansion over the next few years.
“I am convinced that at current rates of saving and investment, we will sustain close to 9% economic growth in the medium term,’’ Singh said while addressing the annual general meeting of the Federation of Indian Chambers of Commerce & Industry (Ficci). Investments account for 37% of the country’s GDP.
Singh’s remarks came after government statistics earlier this month estimated economic growth at a more modest 8.7% for the financial year ending March 31—the slowest pace in three years. India’s Economy expanded 9.6% last financial year.
The slowdown has been attributed to slower credit flows, which have hurt consumer spending. In addition, growth in the manufacturing sector has nose-dived over the last several months. Exports, which account for 23% of the country’s Economy, have also slumped on account the rising value of the Indian currency against the dollar.
The government has targeted an average growth of 9% in the first four years of the 2007-2012 Five-Year Plan period, ending with 10% growth in the final year.
Another factor that is causing concern to the government is inflation. With the price of petrol and diesel revised upwards on Thursday, inflation is expected to inch up in the coming months. “Our objective is to ensure that this growth process is as inclusive as possible, in all dimensions, and it can be sustained while holding inflation under check,” the Prime Minister said.
“A large continental Economy like ours can sustain fairly high rates of growth based on sustained growth of the home market, even if there is turbulence in global Markets,’’ Singh said, adding that in the years to come, India and China would be viewed as the new growth engines of the evolving world Economy.
