New Delhi(PTI): India’s growth in the current fiscal will exceed 7.5% as there are “silver linings” in the global financial turmoil, with government committed to ensuring that the country remains a “bright spot” in the world economy, Finance Ministry said on Monday.
“This year we are targeting about 7.5% to 8% growth. We are quite confident that upwards of 7.5% is what we can reasonably expect,” Economic Affairs Secretary Shaktikanta Das said at an ICRIER event here.
The ministry believes that India remains as one of the very few bright spots in the global economy, a view echoed by the IMF as well, he said.
“But that is no cause for complacency and government is committed to continue to take necessary measures to retain that position for India,” he said, adding that India will account for 18 per cent of the global growth.
The Indian economy expanded by 7% in the first quarter (April-June) of current fiscal. In last fiscal, the GDP growth was 7.3%.
Das said the US-Iran deal, the shale gas revolution, the expected innovation in solar energy and developments around fighting the menace of black money and terror funding would act as “silver linings” for the global economy.
“There are silver linings and while we recognise that world economy today has become volatile, which many people say has become the new normal, there are also opportunities, there are also silver linings,” Das said.
He said “while volatility and uncertainty are new normals, India is uniquely placed to be the bright spot and government is taking necessary policy measures. It is India’s chance to grow and government will see that this opportunity is not stifled”.
He said there has been some concerns around agriculture sector, but there is some visibility of pick up in rural demand. Besides, increased infrastructure spending and more FDI coming in with global majors like GE and Foxconn investing in India makes a case for better manufacturing output.
“Emphasis on manufacturing does strengthen our expectation that growth numbers will be maintained. IIP figure show improvement in capital goods and manufacturing. We are quite confident that growth rate will be 7.5% plus,” Das said, adding FDI in April-June jumped 40% to Rs 60,300 crore.
India is considered as one of the few bright spots because of various reasons – the twin deficits (CAD and the fiscal deficit) are well in control, and forex reserves are fairly comfortable, he said.
He said the RBI and the government are monitoring the current account deficit position and will take steps to keep it at manageable levels.
The CAD, which is the difference between the inflow and outflow of foreign currency, narrowed to 1.2% of GDP in April-June quarter, from 1.6% in the same period last fiscal.