Economy will see high growth, asserts FM

Dispelling fears of further slowdown in the Indian economy, Finance Minister Pranab Mukherjee said the economy will soon revert to the path of higher growth trajectory.

“The present downturn is only temporary, the pause in Indian growth story is brief,” the Finance Minister assured amid growing concerns that turbulent Europe grappling with s severe debt crisis, may send shockwaves to the world markets, including India and put downward pressure on country’s growth in medium to long term.

Mukherjee’s comments came during his address to a finance ministry consultative committee on Monday.

He said a sharp drop in food inflation and moderation in headline inflation, a high savings rate were reassuring factors that growth rebound was not far away. He said necessary instructions were also given to all ministries and departments to adhere to their expenditure ceilings.

India’s latest food inflation came down to 1.81 per cent, a near 4-year low and headline inflation also showed signs of easing after remaining close to 10 per cent in the past months.
India has a saving rate as high as 34 per cent, which is higher than various other countries.

The private corporate saving in the country is also experiencing a steady increase in the past two decades. India also has a high investment rate compared to other countries.

However, problems arising in the economies of other countries such as high commodity and high oil prices have lately put pressure on India’s macroeconomic front.

The finance minister acknowledged the short term pressure felt by the economy such as euro-zone crisis, downturn in external demand resulting in slowdown in exports, currency volatility and current account deficit among others.