The Indian economy will soon return to an eight-nine percent growth trajectory - from around seven percent projected for the fiscal ending March 31 - on the back of high domestic savings and investment rates and favourable demographics, President Pratibha Patil said Monday.
"The long-term fundamentals of the Indian economy remain robust. India’s growth prospects arise from factors such as high domestic savings and investment rates, favourable demographics, and a stable democratic polity,” the president said while addressing a joint session of parliament on the first day of the budget session.
“My government is confident that it will soon steer the country back to the high growth trajectory of eight to nine percent,” she said.
As per Central Statistical Organisation data, economic growth is expected to slump to a three-year low of 6.9 percent in the current financial year, substantially down from the budgetary target of around 9 percent and the 8.4 percent expansion registered in the previous year.
In what could be her last address to a joint sitting of parliament, the president said that even seven percent growth for the current financial year could be considered healthy, given the global trends.
“Our economy grew at a handsome rate of 8.4 percent in 2010-11, but it has slowed down to about 7 percent this year. This remains a healthy growth given current global trends,” she said.
The president listed a number of measures to boost economic growth and to curb corruption, inflation and black money.
She said the proposed direct and indirect tax reforms would help boost economic growth.
“Efforts are underway to build political consensus on the Goods and Services Tax, which will give a major boost to the economy by rationalising indirect taxes and giving full input credit,” she said.
To curb black money, Patil said the government has initiated action on enactment of a Benami Transactions (Prohibition) Act and had commissioned studies to assess the quantum of black money both within and outside the country.
“We are taking many steps to contain the generation and outflow of illicit funds from the country and for opening channels for getting information on black money from other countries," the president said.
Patil said the government will target four percent agricultural sector growth and nine percent overall growth in the 12th Five Year Plan period that begins April 1.
India's economic growth has slowed down sharply this year mainly due to high interest rates, fragile global economic conditions and the government's inability to push through key reforms.
The growth fell to 6.1 percent in the third quarter of the current financial year after growth of 6.9 percent and 7.7 percent in the previous two quarters.
Despite recent moderation, the president said, inflation, especially in food articles, continued to remain a major challenge for the government.
She said the fiscal and monetary measures taken by the government had yielded desired results in recent months in curbing inflationary pressure.
The president said the recently announced National Manufacturing Policy would help boost the share of manufacturing in GDP to 25 percent by the end of this decade from around 16 percent now and create 10 crore new jobs.
“Government will be establishing National Investment and Manufacturing Zones to promote growth in manufacturing,” she said.
Patil said the government would provide Rs.17,500 crore over the next five years for implementing trunk infrastructure projects and another Rs.1,000 crore for project development activities on the Delhi-Mumbai Industrial Corridor.