New Delhi / Mumbai: Returning to a high growth rate is the greatest challenge facing India, with a weak monsoon making the task harder, but the economy may improve by year-end, Prime Minister Manmohan Singh said in his Independence Day speech.
India’s economy is likely to grow by 6.5-7% in the year to March 2010, a top policy adviser said this week, matching the 6.7% growth in 2008-09, and well below the growth rates of 9% or more in the previous three years.
“Restoring our growth rate to 9% is the greatest challenge we face,” Singh said in his annual address from the ramparts of Delhi’s historic Red Fort.
“We expect that there will be an improvement in the situation by the end of this year,” he said, after unfurling the Indian tricolour to the sound of the ceremonial 21-gun salute.
Monsoon rains in India, Asia’s third-largest economy, are 29% below average so far, raising concerns of weaker farm output and inflation. Economists say a bad monsoon could knock as much as 2 percentage points off growth.
With nearly one-fourth of the country reeling under drought, the government has asserted the country has adequate stocks of foodgrains and all efforts would be made to check rising prices and hoarding.
“No one will go hungry...we will provide all possible assistance to our farmers to deal with the drought,” the Prime Minister said.
In order to mitigate hardships of farming community, the Prime Minister said the government has postponed the date of repayment of loans and additional support has been given to the farmers for payment of interest on short-term crop loans.
The PM also appealed to the businessmen and industrialists to join government’s efforts to tackle the difficult situation, arising out of drought, and “fulfill their social obligation.”
Singh, leading the Congress party coalition for a second term after a decisive election victory in May, also called for calm in dealing with the H1N1 pandemic.
The Prime Minister said the Centre was coordinating with the state governments in controlling the swine flu situation and there was no need for panic and disruption of daily life.
Swine flu has claimed 26 lives so far with the maximum number of cases reported from Maharashtra.