Indian Economy To Return To High Growth In 2-3 Years: PM

India’s Prime Minister Manmohan Singh on Wednesday predicted that the nation’s economy would return to a high growth trajectory path within the next 2-3 years, admitting that the government must take further steps to address domestic issues and promote inclusive growth.

Singh, who was speaking at a session of the lower house of the Parliament, said that the economy has slowed primarily to international factors, though the government was also taking responsibility for future action.

India’s Prime Minister Manmohan Singh on Wednesday predicted that the nation’s economy would return to a high growth trajectory path within the next 2-3 years, admitting that the government must take further steps to address domestic issues and promote inclusive growth.

Singh, who was speaking at a session of the lower house of the Parliament, said that the economy has slowed primarily to international factors, though the government was also taking responsibility for future action.

“Nothing is achieved by dampening the spirit…We have taken steps and in 2-3 years we will return the economy to the robust growth path,” the Prime Minister said, as cited by the Press Times of India, after being pushed for a response from opposition members.

“It is certainly true that in the last two years there has been a slowdown in the economy and it has been reflected in the GDP. In the Economic Survey of 2012-13 and the Finance Minister’s budget speech, we have explained at length the factors that are responsible for the slowdown,” Singh added.

[quote]”The country needs a growth rate of 8-9 percent if we are to get rid of poverty and unemployment. We will come out of current economic situation and bounce back to seven to eight percent growth in two to three years,” he reiterated.[/quote]

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Later, Finance Minister P Chidambaram also defended the country’s present inflation rate, claiming that the consumer price index (CPI) was high – at over 10 percent – because the government had increased the minimum support price (MSP) of foodgrains.

“CPI is driven by food inflation. Cereal inflation is high because of high MSP, pulses inflation is high because of demand and supply gap,” Chidambaram said.

[quote]”We are trying to pump in more pulses. No government has doubled the MSP in five years,” he added.[/quote]

According to the Wall Street Journal, India’s economic growth is currently at its weakest in nearly a decade, with slowing investments and weak demand for its exports in developed markets.

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Global financial institutions HSBC and Morgan Stanley lowered India’s economic growth forecast for 2013 from 6.2 percent to 6 percent, citing “the still-challenging domestic and external environments.”

In a separate interview with WSJ, IMF economists Thomas Richardson and James Walsh also warned that India faced the challenge of balancing competing interests, such as the rights of the poor and the need for land to set up industries, in order to boost its economy.

“Growth has been slowing, mainly because investments have slowed. We have been arguing for a while that the main reasons for slowing growth are structural in nature, more than lack of financing,” said Richardson.

[quote]“Things like getting projects approved–and cleared and implemented–really seem to have slowed down. That is the top priority, to find a way to balance competing interests: Environmental interests against growth; land rights, especially among the poor.”[/quote]

“The measures that India took last year to encourage more FDI [foreign direct investment] inflows and some measures proposed in the budget to support more inflows, especially in infrastructure, would help minimize the risks associated with the widening deficit,” added Walsh.