New Delhi(PTI): India is projected to grow by a robust 7.8% this year and 7.9%…
NEW DELHI: There was more than a hint of positivity in the finance minister Arun Jaitley’s response to a query on whether India could grow at 7.75-8% GDP growth in the current fiscal.
The minister, who interacted with media to speak on wide-ranging issues on Monday at the Indian Women’s Press Corp, said, except for the “shrinking” world trade, most variables were turning in favour of the domestic economic growth.
“I would say if you look down the tunnel – moderate level of oil prices, (good) monsoon and the consequential impact of reduced sectoral stress (in steel, highways, sugar and power) and it’s possible impact, over the next two quarters, on the balance sheets of the banks – these could add to the positive (outcome of pushing up) the present growth (rate),” he said.
Taking stock of the current economic situation, Jaitley said the odds that were stacked against the growth were reducing with provisioning for bad debts by the banks in the stressed sector and a sufficient rainfall that will lift the demand in the rural sector even when the global trade was shrinking every month.
“If you look at the variables – Is the world economy likely to improve? The answer is doesn’t appear to be positive. The oil prices broadly remain range-bound to our advantage. The third factor – what will be the impact of the possible nature of the monsoon? That again, so far the predictions look positive,” said an optimistic minister.
According to him, if rains were to be favourable then it will not only be good for agriculture but it will also boost rural demand, which could push up private sector investment, which has not picked up due to underutilisation of the production capacity and huge stock of idle inventory.
“To get the peak growth rate, global tailwinds have to be very strong. When those tailwinds are not there and, on the contrary, there are hostile headwinds then growth is extremely difficult,” he rued.
Jaitley, however, felt that India continued to be the bright spot in the world economy, which has been projected to grow at 3.1% by International Monetary Fund (IMF) in the current year. The international economic body has predicted the emerging economy to grow at 4% and Asia at 5.7% in the same year.
“Whatever growth we have today is predominantly contributed by domestic factors. The first being high public spending, second FDI and the third is improved urban demand,” said the minister.
He believes things could improve going forward if the monsoon forecast for the fiscal came true and sectoral stress on bank balance sheets diminished. Last two years have seen sub-par rains in the country. This had pulled down the average rate of GDP growth in the agricultural and allied sector to as low as 0.5% in financial year 2014-15 and 2015-16.
“Therefore, the world continues to watch us with crossed fingers,” he said.
And as all eyes turn to India, says his government was trying to keep their “appetite” alive with new proposals and consistently reforming.
with PRAVEENA SHARMA