New Delhi: Asserting that government will take steps to limit the impact of any global slowdown on India, Prime Minister Manmohan Singh on Friday exuded confidence that the domestic economy will grow at 9% this year and inflation contained at an acceptable level.
“There are global concerns of a slowdown. We need to be aware of these concerns and we will take steps to limit their imapct on us. The Finance and Commerce Ministers are siezed of the matter. I do not see any reason why we cannot sustain 9% growth even in the face of global slowdown,” he said at the annual meeting of industry chamber FICCI.
He said that government has taken an important policy stand to keep inflation under check and ensure that growth is more inclusive.
“I know that some of you are not happy about our emphasis on inflation control. There have been some impatient editorials about the sacrifice of growth at the alter of inflation control,” he said.
Singh noted that inflation is an iniquitous tax. “It hurts the poor more than the rich. Therefore, it is essential that we ensure that the poor are not adversaly affected by high inflation, particularly (that of) basic items of consumption. This is a matter of social priority and of their survival,” he said.
The Indian economy registered a growth rate of 9.6% last year and is likely to touch almost 9% this year, Singh said.
“On the other hand, there are clouds on the horizon with a distinct possibility of global economy, particularly the developed world, facing a downturn in the coming years,” he added.
He said that a major part of India’s growth story is driven by domestic factors, particularly improved investment and consumption demand. However, India cannot be completely insulated from “chilly global winds that may blow in our direction”.
Pointing out that savings rate has almost touched 35% of GDP and investment rate is at its peak of over 36%, he said investment is an act of faith and vote of confidence.
“There will be ups and downs, there will be leads and lags, there will be sectoral and regional imbalances. These should be addressed. But let us not miss the wood for the trees.
“There is an underlying dynamism in our economy and it is translating into more employment, higher revenues for the government, higher level of social expenditure, higher incomes and, most importantly, into lower poverty and better standards of living,” Singh said.
The Prime Minister said it will be his government’s endeavour to maintain an environment conducive to enterprise and creativity, so that “we do not choke off essential growth processes which are too essential for meeting our social and national goals”.