Govt committed to financial reforms; expects GDP to grow at 6.5%

Govt committed to financial reforms; expects GDP to grow at 6.5%

Mumbai: Government is working with various regulators to push financial sector reforms in the country and expects the GDP to grow at above 6.5% in FY10, finance secretary Ashok Chawla said on Monday.

India’s economy, which expanded by 6.1% in the first quarter, would draw strength from a healthy growth in manufacturing and services sectors, Chawla said.

“We expect the (GDP) growth to be 6.5% or above....surely, there are signs the economy is moving back to a higher growth path. The move to a higher growth trajectory is well on course," Chawla told reporters here.

Despite the impact of the global financial, India will move ahead with financial sector reforms and the government is working with various regulators to push the reform process, Chawla said.

“The Government is working with regulatory agencies to bring about financial sector innovations and reforms," Chawla, said.

Though a weak monsoon is likely to have an adverse impact on agriculture output, this is unlikely to have a major impact on the overall growth, given that the sector’s contribution is a only 18% to the GDP, the finance secretary said.

The manufacturing and service sectors will compensate for any shortfall from agriculture, he said.

The GDP growth of 6.1% in Q1 FY10 indicates that the economy is back on the higher growth path. Similarly, the Index of Industrial Production (IIP) growth at around 5% and service sector growth at around 8% were also promising, he said.

On the launch of interest rate futures on Monday, the finance secretary said that volumes were not the only thing. The manner in which the market develops is very important, he said.

Banks and FIIs can also participate in interest rate futures within the regulatory framework, he said, adding that this is expected to give a push to this product.