New Delhi: India will focus on driving domestic demand until key developed markets recover and will not exit fiscal stimulus measures until necessary, Union finance minister Pranab Mukherjee said on Tuesday.
“There is a need of generating strong domestic demand until the robust recovery all over the world, particularly the developed world takes place,” he told a World Economic Forum event in New Delhi.
Mukherjee repeated his pledge for massive investments in agriculture sector and infrastructure, and acknowledged that it would not be easy for Asia’s third largest economy to compensate for the loss in exports through domestic demand.
“It is not easy for us to diversify the market overnight and make up the loss so we shall have to wait for some time,” he said.
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The finance minister was hopeful of economic growth of more than 7% in the fiscal year ending March, 2011.
“Maybe in 2012 we will be able to reach the magic figure (of 9-10% growth),” he said.
Policymakers including Prime Minister Manmohan Singh have pressed the case for keeping easy fiscal and monetary policies in place to nurture growth.
“This cannot continue for a long period of time,” Mukherjee said, referring to the exit from easy fiscal policy.
“I have stated a number of times ... that in due course we shall have to take the corrective measures.”
Mukherjee also said he was not worried about the availability of food grains and the government would continue to import food items to meet any supply shortfall.
India’s economic growth slowed to 6.7% in the fiscal year through March after three straight years of at least 9%, and government officials have said growth in the current year is on track for roughly 6.5%.