“Of late there are some signs of recovery in the economy. This is reflected in the Index of Industrial Production (IIP), which is showing improvement. I think in the next six months, one will see the evidence of stabilisation,” he told reporters here.
With the economy soon finding itself on a good footing India will continue to remain a favoured destination for foreign investors, Ahluwalia said adding “as normalcy returns to global markets India is likely to see surge in investment flowing in.”
“We feel the capital flows into India will not be adversely affected. In fact, once the global financial system stabilises, all will recognise that India still remains one of the fastest-growing countries in the developing world,” he said.
Credit growth
“I don’t think we will have difficulty in getting the amount of capital we want. It may not go to the level we had in 2007. But that kind of flow was actually more than we needed,” he said. Further, he pointed out that in fact, when the system stabilises, people will recognise that India remains among the fastest-growing countries in the developing world. And added that with the pick-up in credit growth the economy appears to be on path of recovery.
Meanwhile, on the margins of the upcoming G20 Summit in Pittsburgh, Ahluwalia said “We are concerned that in the guise of improving regulations, they should not be putting in place rules that end up discriminating against developing nations.”
The event, titled ‘International Cooperation in Times of Global Crisis: Views from G20 countries’ — was organised by the Indian Council for Research on International Economic Relations (Icrier).
Interestingly, Ahluwalia’s optimism about the Indian economy has come close on the heel of the Planning Commission forecasting economic growth of 6.3 per cent for 2009-10 compared to average 9 per cent growth rate in the last three financial years preceding 2008-09. During 2008-09 the economic growth slipped to 6.7 per cent under the impact of ripple effect of global slowdown.
The Planning Commission has projected that in the worst-case scenario due to weak Monsoon the growth rate could decline to 5.5 per cent if agricultural is badly hit.
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