PM: Growth to be 5% in FY14, revival ahead

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‘Savings, investment rates high; entrepreneurial spirit still alive’

PM: Growth to be 5% in FY14, revival ahead
Prime minister Manmohan Singh said on Wednesday that India’s economic growth would slow to 5 per cent this financial year but recent reforms and fast-tracking of big infrastructure projects would make the country “re-emerge” as an attractive investment destination.

Though India clocked an average 7.9 per cent GDP growth in the past nine years, there was a slowdown in the past couple of years and “we will probably end this (financial) year at the same level as last year with 5 per cent growth,” Singh told the annual Pravasi Bharatiya Divas conclave.

He said global and domestic factors were responsible for the slowdown, but India’s economic fundamentals remained “strong” despite challenges. “Our savings and investment rates are still over 30 per cent of our GDP and the entrepreneurial spirit is very much alive and kicking.”

Singh mentioned the many decisions taken by his UPA government in recent months to speed up mega infrastructure projects, reform tax administration, improve fiscal management, liberalise foreign direct investment and rationalise the system of allocation and utilisation of natural resources.

“With greater political support, we could have legislated deeper reform measures; for example, in the financial and insurance sector,” he said. The decisions already taken had begun to make an impact.

“India is re-emerging as an attractive investment destination. I am sure you will see the evidence clearly in the next few months,” he said. Since 2004, he added, India’s economic growth had not only accelerated but had also become socially more inclusive and regionally more balanced.

“Our poverty levels are declining at faster rates, economically weaker states are growing at faster rates, agriculture growth has accelerated and real rural wages have increased three times since 2004,” he said.

Much of rural India would be connected by broadband in the near future. About a thousand institutions of higher education were today part of the high-speed National Knowledge Network. Telephony was now within the reach of everyone, he said.

He urged Indians abroad to stay positive despite questions about the future of the Indian economy and concerns about social challenges.

“There was a perception in some quarters outside India that the country was losing the momentum of the past decade. This was also amplified by the political contestations here in India, which are inevitably louder in the election season,” the prime minister said. “I want to assure you that there is no reason to despair about our present or worry about our future.”

On infrastructure development, he said: “We have added 17,000 km of highways and more than 200,000 km of new roads in rural areas. Our power generation capacity is expanding rapidly, aided by initiatives in solar, wind and nuclear energy to give ourselves a more sustainable energy future.”

On providing a clean and transparent government, Singh said the task was complicated “because we have to overhaul entrenched practices and systems while respecting the federal nature of our polity”.

Strengthening governance was an ongoing process. “We can never say that we have done enough, but I am confident that we are moving in the right direction,” he said.

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