Indian economy to outpace 7.3% growth of last fiscal: Jaitley
Hong Kong: Aiming to reap significant benefits from continuing reforms, Finance Minister Arun Jaitley today said all macroeconomic parameters including fiscal deficit and inflation appear positive and hoped that GDP growth would outperform 7.3 per cent rate of last year.
Addressing global fund managers and institutional investors here, Jaitley said the government is conscious of the fact that it needs large investments and resources and domestic investments were inadequate.
“Certainly, I think international investment is going to be a great source of resource for us and with all these economic activities (ongoing and fresh reforms) planned, even in the midst of somewhat gloomier global situation, I think India has the potential to stand out as a relative brighter spot.
“We grew by 7.3 per cent last year and I hope that we are able to outperform our last year’s growth numbers,” Jaitley said here at the inaugural APIC-India Capital Markets and Institutional Investors Summit.
The minister said he was conscious of the adversities that would come in the way and would need to be overcome.
“India ended the last year with 7.3 per cent growth rate. We had good fiscal figures, Fiscal deficit is gradually coming down and we are now aiming to bring it down in the next 2-3 years to 3 per cent.
“Current account deficit down to 1.2 per cent, foreign exchange reserves are very high, inflation is very much in the control and therefore the macroeconomic indications all seem to be positive. But this is in the midst of a global slowdown.
“This is despite global headwinds that are not helping us and at times are creating adversities, particularly the external factors have impacted our exports and in favourable global conditions we can improve on the growth rate of 7.3 per cent in a significant way,” he said.
Jaitley further said this interaction with investment industry leaders could not have come at a better time.
“Time is significant as the world itself is witnessing a slowdown. The growth estimates for the world economy have been projected downwards. Along with that there has been a slowdown in the global demand and therefore a re-adjustment of investment by the investing community would obviously be taking place,” Jaitley said.
Referring to slowdown in China, he said there have been concerns with regard to developments in this side of the world, particularly China.
“But I have not the least doubt in my mind that a very large economy that grew at a rapid pace in the last three decades, would still have to shoulder a large part of the burden of the global growth.
“Of course, investors would also be looking at alternate sources for their investments and certainly they would be very carefully assessing which those alternative sources are” he added.
There has always been a cautious optimism in the investors’ mind about India, he said.
“I say this because on one hand they have assessed India has a very large market, a market where people have become very aspirational and want to grow, a market which has a huge pool of human talent but also a country which at certain critical times has not availed of the opportunities.
“Therefore the cautiousness in that optimism always remains there,” he said, adding that now there are some significant reasons and factors where India is now changing.
According to him, India has now a government which has a decisive majority and therefore the government is capable of taking important and difficult decisions.
Secondly, India has Prime Minister Narendra Modi as its leader which has 13-14 years of experience as a development oriented leader in Gujarat. His performance speaks for itself, Jaitley emphasised.
“He is a strong leader who is capable of taking decisions which are critical for Indian economy.
“The third significant change that is taking place is that the Indian political debate has normally got vitiated in the past with two extremes — either you are pro-poor or you growth-oriented. Some political groups tried to create a fictional contradiction between the two,” he said.
The present government sees the two as complimenting each other. The best response to poverty alleviation in India is that the country must grow and grow faster. In this respect, necessary steps needs to be taken so that India is able to pull up those weaker sections, he said.
India has also got the adequate resources in order to start effectively its poverty alleviation programmes, he added.