NEW DELHI: Prime Minister Manmohan Singh urged investors yesterday to “remain optimistic”, while acknowledging that the country would register lower annual growth than expected in 2013-14.
Singh also warned India had to lower its current account deficit to 2.5 percent of gross domestic product and pledged more measures to open up the struggling economy to foreign investors after a raft of recent reforms.
With less than a year before elections, Singh is trying to rebuild confidence in an economy that grew five percent last year — the slowest in a decade — and boost the rupee, which has hit a string of record lows in recent weeks.
“We had targeted 6.5 percent growth at the time the budget was presented but it looks as if it will be lower than that,” Singh told an audience of industry leaders in New Delhi.
“The most immediate cause of worry is the volatility of the rupee in foreign exchange markets,” Singh said, adding the situation was likely exacerbated by a ballooning current account deficit of 4.7 percent in 2012-13.
“We should bring the current account deficit down to 2.5 percent of our GDP,” he added.
“It is clearly not possible to do this in one year but I expect that the current account deficit in 2013-14 will be much lower than... last year.”
India’s deficit stems mainly from large oil and gold imports, and Singh said the government was taking serious measures to reduce demand for both products, while expressing hope that a weak rupee would bolster exports.
The prime minister said the government was taking all steps to boost investments and build infrastructure for the economy to rebound.
He hoped the agriculture sector would do well due to the plentiful rains and would help revive demand in rural areas, contributing to stronger industrial performance in due course.
“Industrial growth has not yet recovered. However, I am happy to say that agriculture looks well set to show a good
performance.”
“I feel we can and we should remain optimistic. The basic fundamentals of our economy are sound and healthy. We have been taking all possible measures to correct imbalances on the macro front,” said the prime minister.
Highlighting the government’s performance, Singh said the average growth rate during eight years (2004-05 to 2012-13) was 8.2 percent. This was much better than 5.7 percent achieved in the previous eight years.
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