Singapore: India’s gross domestic product growth is expected to return to “9% plus” this year, commerce and industry minister Anand Sharma said on Friday, led by strong corporate performance and rising savings levels.
The minister also said he expected inflation, which is fuelled by food demand, to be brought under control.
“We are seeing strong economic growth. We are going back this year to plus 9% GDP growth,” Sharma told reporters in Singapore at the end of a two-day trip aimed at drumming up investment in the infrastructure sector.
The finance ministry has forecast 8.5% growth for Asia’s third-largest economy in the current year, following a 7.4% expansion in the previous year. The IMF has forecast 8.8% growth.
Strong corporate sector performance and high levels of saving and investment have led to higher growth, Indian officials said last month. India is saving and investing about 34% of GDP, compared with around 30% prior to 2003.
Inflation, running at over 10%, has been a mounting concern, however, but Sharma said he expected it to be brought under control this year.
“Inflation has been there, fueled by food articles demand and supply issues last year. We are assured this will improve this year,” he said.
The food price index rose 12.63% in the year to 26 June, according to data released on Thursday, easing from the previous week’s annual rise of 12.92%.
Wholesale prices, the most closely watched inflation gauge in India, rose 10.16% in May from a year earlier and a senior government official said it could hit 11% in June.
Sharma said the government aimed to boost the share of manufacturing in GDP to 25% from 16% now and turn the country into a manufacturing powerhouse.
He said India’s infrastructure sector offered a huge opportunity for construction companies. “The sector is set to absorb $1.7 trillion in the coming 10 years, that’s great opportunity.”