Days after the Indian economy recorded its worst performance in the past four years and the rupee continued in a downward spree, the government on Thursday insisted there was no room for gloom and pessimism and that the economy will bounce back from the current slowdown.
“We are concerned about the decline in growth last year and I am especially concerned about the decline in growth in the first quarter this year. But I don’t think we should give room to gloom and pessimism. These ups and downs will happen in the life of a country.
We will bounce back,” Finance Minister P Chidambaram said replying to a discussion on the supplementary demand for grants in the Lok Sabha.
The growth in the Indian economy moderated to a four-year low of 4.4 per cent in April-June. The Indian economy had grown 5 per cent in 2012-13, the slowest pace in a decade. Analysts expect the GDP growth to improve only marginally this year.
The Lok Sabha on Thursday gave its nod to the government’s first supplementary demands for grants, projecting a gross additional expenditure of Rs 7,499 crore. The net cash outgo will be only Rs 127 crore.
An approval for Rs 981.4 crore was sought from Parliament for an increase in requirement for purchase of a vessel by the Geological Survey of India. Around Rs 2 crore had been sought for grants to Bharat Gold Mines for a global tender and Rs 25 crore for major repair works at the Supreme Court of India, Chidambaram said.
Around Rs 2 crore was also sought for restoration of the Kedarnath temple, which was partially damaged in the Uttarakhand floods.
Referring to the small quantum of supplementary demands, Chidambaram said, the government was careful about using the money as this year has been a year of fiscal consolidation.
“I have repeatedly said that 4.8 per cent which we have estimated is a red line and will not be crossed,” he said.
On questions raised by members about the sharp fall in the rupee, Chidambaram said the rupee fall was a matter of concern but it will correct itself and find its true level.
“The value of the rupee is indeed a matter of concern. The rupee must find its appropriate level... we believe it has overshot its true value... correction will take place, a number of measures are being taken in order to strengthen and restore confidence in the Indian economy...,” Chidambaram said.
The rupee has been one of the worst performing currencies among emerging market currencies. The Indian unit has weakened nearly 20 per cent since the beginning of the current financial year to a record low of 68.80 against the US dollar.
The opposition BJP alleged that the “incompetence, corruption and mismanagement” by the Congress-led United Progressive Alliance government over the past nine years had ruined the country’s economy.