Thaindian News

New Delhi, Oct 22 (IANS) Finance Minister Pranab Mukherje Saturday said the Indian economy was getting “adversely affected” due to the global economic turmoil but the medium-term prospects for the country remained buoyant.

“Indian economy has become increasingly integrated with the global economy. It is indeed a matter of pride that the world views India today as a major driver of growth,” Mukherjee told the 56th meeting of the National Development Council (NDC) here.

“But globalization also has a downside. It means that when the world sneezes, India runs the risk of catching a cold. Not surprisingly, the economic crisis in Europe and the slowdown in the US are impacting us adversely,” he added.

India’s gross domestic product during the first quarter of the current fiscal stood at 7.7 percent.

“While there may be some moderation in growth in the current fiscal, the fundamentals of the economy are intact and the medium-term growth prospects remain buoyant,” said Mukherjee.

The NDC is the highest decision-making body on matters pertaining to central and state finances and also approves Five Year Plans. This meeting is to discuss the approach to the Twelfth Five Year Plan (2012-13 to 2016-17).

The council, chaired by the prime minister, was attended by Planning Commission Deputy Chairman Montek Singh Ahluwalia, Agriculture Minister Sharad Pawar, some key central ministers and chief ministers.

Talking about the 12th five year plan, the finance minister said it was better to pitch for a 9 percent growth rate on an average during the period.

“There are good reasons to pitch for a 9 percent average growth for the plan period. Yet we need to retain a certain flexibility in our planning to consider raising growth target to above 9 percent, should global environment improve and we make good progress in strengthening our domestic growth drivers in initial years of the 12th Plan,” he said.

Mukherjee also asked the chief ministers to improve investment climate in their states so that the country is able to meet the target of investing $1 trillion towards infrastructure development during the 12th plan.

“Issues like land acquisition, environment clearance and resettlement and rehabilitation will have to be addressed to de-risk both green-field and brown-field project development. We have to be focused on creating an enabling environment to facilitate investments.”

He also urged states to reduce fiscal deficit and bring in reforms in key sectors such as agriculture and taxation.