Finance minister rules out job cuts, talks of growth (Lead)

October 31st, 2008 - 8:48 pm ICT by IANS  

New Delhi, Oct 31 (IANS) Finance Minister P. Chidambaram Friday said Indian economy would log not less than 7 percent growth in the current fiscal, notwithstanding global meltdown, and ruled out any reduction in existing job levels.”The RBI (Reserve Bank of India) estimates that growth (in fiscal 2008-09) would be at 7 percent. I think it would be at 7.5 percent but definitely would not be lower than 7 percent,” Chidambaram told reporters here.

“Growth at 9 percent (as was originally anticipated) would signal rapid creation of jobs. Growth at a lower rate does not imply a destructive employment situation,” the finance minister maintained.

“It is for this reason that I disagree with an (industry lobby) Assocham (Associated Chambers of Commerce and Industry) study (saying that Indian corporates would cut jobs by 25 percent due to the global financial crisis),” Chidambaram said.

Assocham Friday withdrew its report of 25 percent job cuts, clarifying in a statement that “the report was not representative of the industrial segment in its totality”.

Said Chidambaram: “The pace of creating jobs might slow down, but even at 7 percent, jobs will be created.”

Responding to a question on the impact of the crisis on India’s exports, Chidambaram said he couldn’t “elaborate” on this.

Asked what India would bring to the table at the G-20 meeting US President George Bush has called in Washington next month to deal with the financial crisis, the finance minister replied: “We are formulating our response.”

India, faced with a double-digit inflation at 10.68 percent for the week ended Oct 18, had clocked 9 percent growth in the past four years.

The Prime Minister’s Economic Advisory Council (EAC) has forecast an economic growth of 7.7 percent in the current fiscal.

The International Monetary Fund (IMF) has forecast 8 percent growth for India’s $1.2 trillion economy in the current fiscal ending March.

Arvind Virmani, chief economic advisor to the ministry of finance, had told IANS in an interview in September that India’s medium-term growth potential was of 9 percent.

“In my view, the medium-term growth potential of Indian economy is 9 percent,” Virmani had said, adding, “Economy will grow below the trend in the current fiscal but return to the trend by next year.”

In 2005-06 and 2006-07, the Indian economy grew 9.6 percent to 9.24 percent respectively, which was slightly above the trend.

Indian economy logged 7.9 percent growth in April-June of the current fiscal as against 9.2 percent in the last same period. During 2003-4 to 2007-8, the average growth rate of economy was 8.9 percent.

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