New York: Finance minister Pranab Mukherjee on Wednesday expressed confidence that India will be able to achieve 8% growth this year, even as he noted that the global economic environment remains an area of concern.
“We will have 8% growth even this year, though the first quarter growth figure is 7.7%,” he told reporters here after meeting leading Indian industrialists at an investment forum.
He said a good monsoon could ensure agricultural growth of about “4% plus” and growth in the manufacturing and service sector “clearly indicates that it will be possible for us to have the growth at around 8% for this year”.
Mukherjee said India has projected 9% growth for the 12th five-year plan (2012-17) and the country is taking necessary steps to ensure that the momentum continues.
On the outlook for the rupee, he said the Reserve Bank of India (RBI) is “watching the situation”. “The RBI Governor has made it quite clear that as and when the situation warrants, the RBI will intervene. Right now, there is no such situation,” he added.
Mukherjee pointed out that the international environment is an “area of concern”, particularly the high ratio of sovereign debt to the gross domestic products (GDP) of euro zone nations and the slow pace of recovery in industrialised countries.
He added that inflationary pressure and forex volatility in emerging markets is “posing serious concerns, but at the same time, as the collective leadership of the international community has been able to address the problems (that) arose out of 2008 crisis, we will be able to overcome this current crisis,” ensuring that India’s growth will be 8% plus.
Mukherjee will be in Washington for the International Monetary Fund (IMF) and World Bank’s annual meeting as well a meeting with his counterparts from the BRICS (Brazil, Russia, India, China and South Africa) grouping, where the countries would review the global situation and try to work out a common approach to issues that will be debated in the IMF-World Bank meeting.
“We will also discuss our strategy in respect of the euro zone crisis,” he added. He said the BRIC leaders would exchange views and these will be reflected in a communique that is currently being drafted.
Later, speaking at a United States India Business Council (USIBC) event, Mukherjee said no country has remained immune to the fallout of the global financial crisis in 2008. Though the economic downturn was moderated and growth resumed in the second half of 2009 in most economies, the pace of recovery remained uneven.
Advanced economies grew more slowly than before, while fast emerging economies like India and China showed the way for the rest of the world.
“There is wide-spread apprehension that even the tepid global economic recovery that we have seen so far is stalling. Slowing global aggregate demand, the unresolved euro debt crisis, high commodity and oil prices, inflationary pressures and stressed currencies have shaved 1-1.5% off the global GDP in the past 6-8 months,” he said.
Mukherjee noted that his top priority in the coming months is to get a few legislations approved by both Houses of Parliament, “which will make a sea change and will unleash a second generation of reform.”
He said he was interested in pushing through an amendment to the Constitution that will facilitate the introduction of a uniform Goods and Services Tax across the country.
Mukherjee expressed hope that other legislations, which will facilitate more investment from abroad in sectors like insurance and banking, would get approval from Parliament in the forthcoming Winter Session so that he can include appropriate provisions in the next Budget.
“We are working to build a policy consensus on a number of pending issues, such as introduction of goods and services tax, a new national manufacturing policy, further liberalisation of foreign direct investment (FDI), including retail and strengthening financial markets for long-term investments,” he said.
In this regard, he noted that with respect to FDI in the pharmaceutical sector, some decisions will be taken shortly, as the Prime Minister has called a meeting on the issue next month.
On the US-India civil nuclear agreement, Mukherjee indicated that in light of the apprehensions raised by concerned parties in respect of the Civil Nuclear Liability Bill, there was a possibility of these being addressed in the final Act passed by Parliament. “We have consulted our lawyers who say that the concerns could be addressed by framing the (appropriate) rules under the main Civil Nuclear Liabilities Act,” he said.
He said India is ready to have consultations with other legal experts to get the appropriate legal language. “Whether it is the US Congress or the Indian Parliament, a multi-party democratic system has its own way of functioning and the political executives will have to constantly make efforts to ensure that they can reach a consensus among the various stakeholders,” Mukherjee said.
“It takes time to build up the consensus and bring convergence and so, the legislative process gets delayed,” he said.