India’s economic woes will continue next fiscal: PM

January 17th, 2009 - 9:05 pm ICT by IANS  

Manmohan SinghMumbai, Jan 17 (IANS) Prime Minister Manmohan Singh Saturday said India’s woes due to the global meltdown will continue during the next fiscal, and predicted a lower growth of 6.5-7 percent for the country’s economy this year.”I must emphasise that our problems will not be over in the current year,” the prime minister told The Economic Times Awards function at the sea-facing Trident Hotel. The function was attended by the who’s who of corporate world.

“The difficult period will continue into 2009-10. The government will plan on continuing its efforts for a supporting environment next year also. Both the monetary and fiscal policies will have to be tailored to that objective.”

He said in no uncertain terms that growth in the current year will be lower than last year, as the country’s gross domestic product had expended just 7.7 percent in the first half of 2008-09, against 9.1 percent the previous year.

“The latest estimates for the final outcome in 2008-09 vary between 6.5 and 7 percent. The exact figure is not critical. The important point is that although growth is lower it is still much higher than most other countries.”

“Furthermore our agricultural sector is doing well. The brunt of the recession is being felt in the areas that had seen rapid growth earlier. This imposes pain but hopefully these sectors are more able to cope with temporary difficulties.”

The prime minister said the Indian economy was fortunate that the inflation rate had eased considerably to around 5 percent and was expected to decline further, giving ample flexibility for monetary policy.

“But on the fiscal side, our space is limited. The fiscal deficit in the current fiscal year will be much higher than originally planned. This is not something to be tolerated indefinitely.”

The prime minister said business leaders in the corporate sector would have to cope with difficult and changing market circumstances, while responding to the challenges that lie ahead.

“Crises are also opportunities to reposition oneself, overcome weaknesses and be ready to resume growth as the world turns upward.”

According to Manmohan Singh, the governments of the industrialised world were well aware of the gravity of the crisis and were taking a series of unprecedented and proactive steps to counter the recession.

He said his government, too, has been taken a number of measures to counter the global downturn, while asking the corporate sector to realise that the domestic policy action cannot completely negate the effect of a global downturn.

“There will be a full recovery to our normal economic potential, but this will take place when the global economy reaches normalcy.”

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