The Finance Minister, Mr Pranab Mukherjee, on Thursday laid the blame for the current economic slowdown at the doors of the central bank for its tight monetary policy and on weak global sentiments. Environment policy bottlenecks in the mining sector also affected growth in domestic private investment, Mr Mukherjee said in a statement issued soon after the 2011-12 Q4 GDP numbers were released.
At the same time, the Finance Minister said most of these factors had bottomed out. The rate cycle has been reversed; mining sector growth has turned around, and progress has been made on fuel linkages for coal-based power projects. There has been a turnaround in the investment growth rate in the fourth quarter and a normal south-west monsoon has been predicted for 2012-13, he added.
OFF THE MARK
Describing the 2011-12 Q4 GDP growth of 5.3 per cent and the downward revised GDP growth estimate of 6.5 per cent for 2011-12 as “disappointing figures” in the context of India's recent performance, Mr Mukherjee said these, however, have to be seen in the light of overall global developments.
He noted that there were no major adverse results on corporate performance in the last quarter of 2011-12. All these factors should help in the recovery of growth momentum, he said.
Policymakers and the central bank are way off their mark in their GDP growth forecasts, raising concern about the efficacy of the policies framed on such projections.
While the Reserve Bank of India had, in January, trimmed the 2011-12 GDP forecast to 7 per cent, the Prime Minister's Economic Advisory Council had pegged it at 7.1 per cent.
Capital flows
The Central Statistics Office had in its advance estimate in February, pegged GDP growth for 2011-12 at 6.9 per cent. This now stands lowered to 6.5 per cent at the revised estimate stage.
Meanwhile, Mr Mukherjee said that the Government would take necessary steps to address the imbalance on the fiscal front and on the current account.
This would help check inflationary expectations and inspire enough confidence to attract improved capital flows as well as aid recovery in domestic investment growth, he added.