The slowdown in Indian economy will not last long as the Government is working hard to remedy the situation, Prime Minister Manmohan Singh today said, as he saw positive impact of the move to open up several sectors to foreign direct investment in the coming months.
“I believe that this phase of slow growth in India will not last long... The average rate of economic growth that we have attained in the last nine years (7.9 per cent) shows what we are capable of,” Singh said in his address to the nation from the ramparts of Red Fort on the occasion of 67th Independence Day.
The Government expects the economic growth to recover to 6 per cent in the current fiscal from the decade low level of 5 per cent recorded in 2012-13.
“...economic growth has slowed down at present and we are working hard to remedy the situation,” Singh said.
Easing of FDI cap
He said that the Government has eased the investment cap in several sectors and simplified the procedures to boost the flow of foreign direct investment (FDI).
Last month, the limit on foreign holdings in telecom was raised from 74 per cent to 100 per cent, while the restrictions in a dozen other sectors from insurance to tea plantations were eased or abolished. Besides, it has also liberalised the ECB norms for corporates.
“In the coming months, we will see visible results of these efforts to increase investment. Our growth will accelerate, new employment opportunities will be generated and there will be improvement in the infrastructure sector,” he said.
The Prime Minister hoped that the landmark Food Security Bill, which guarantees foodgrains at highly subsidised rates to 81 crore people, will be passed by Parliament shortly.
Current account deficit
Faced with a widening current account deficit (CAD), the Government is looking at ways to attract foreign funds in the form of foreign direct investment, external commercial borrowings and foreign institutional investments.
The Government hopes to bring down CAD, which is the difference between inflow and outflow of foreign exchange, to $70 billion this fiscal from $88.2 billion in 2012-13.
Infrastructure projects
The Government will kick-start a number of new infrastructure projects, including eight new airports and two new seaports in the coming months, to boost the sluggish economic growth, Singh said while listing out the Government’s initiative in this key sector.
“We will start work on a number of new infrastructure projects in the coming months. This includes two new ports, eight new airports, new industrial corridors and rail projects,” he said.
Economic slowdown
India is not the only country facing economic slowdown but world over there has been a slump in export markets, and the growth in developing countries has been affected.
“It is not only our country that is facing economic difficulties. The last year has been difficult for the world economy as a whole. Major European nations are experiencing a slowdown these days,” he added.
Economic growth
In the last nine years, the economy has grown at an annual average rate of 7.9 per cent. “This pace of development is the highest in any decade so far,” he said.
After growing at over eight per cent for two consecutive years, the economic growth had slowed down to 6.2 per cent in 2011-12 and further to a decade low rate of 5 per cent last year on account of poor performance of the farm, manufacturing and mining sectors.
“The average rate of economic growth that we have attained in the last nine years shows what we are capable of,” Singh said.
He said that rapid economic growth is an imperative as without it the country cannot possibly achieve the targets of removal of poverty, provision of good quality education and health services and creation of new employment opportunities.
In order to accord fast track clearances to large infrastructure projects, the Government had in January set up a Cabinet Committee on Investment, headed by the Prime Minister.
Electricity generation
Stating that inadequate supply of coal has affected electricity generation, Singh said: “this has been resolved to a large extent.”
“Our growth will accelerate, new employment opportunities will be generated and there will be improvement in the infrastructure sector,” he said.
He said without rapid agriculture growth it would not be possible to make the villages prosperous.
“We have constantly endeavoured to increase production and ensure that farmers get remunerative prices for their produce,” the Prime Minister added.