India's GDP growth may slip to 7.5%: FM

NEW DELHI: The Finance Minister Pranab Mukheerjee has indicated that the GDP growth in fiscal 2011-12 may slip to 7.5 per cent or less, but took comfort in the rebound in industrial production in November 2011, decline in headline and food inflation in December and hoped that these encouraging trends would further consolidate in the remaining months of the fiscal year.

Inaugurating the 84th Annual General Meeting of the Federation of Indian Chambers of
Commerce and Industry (FICCI) here on Wednesday, Mukherjee cautioned that, “We have difficult last quarter ahead of us. Our growth for 2011-12 may be around 7.5 per cent or less. There are also concerns on the Central government finances for the current fiscal. Performance during the first half of the fiscal front poses some risks in both receipts as well as expenditure estimates. Therefore, adhering to the fiscal deficit target of 4.6 per cent of GDP in 2011-12 was a major challenge.”

However, there are some clear signs of inflation moderating in the coming months and
industrial production is also showing signs of pick up while services and agriculture retained their growth momentum despite a high base year production which is likely to provide a buffer for moderation in growth rate for current fiscal, the Finance Minister pointed out.

Mukherjee said the progress of economic reforms on some fronts, especially FDI in multi-brand retail and some legislative amendments have not seen smooth passage in the Parliament and appealed the industry to help build consensus across the country’s diverse social and political space, a PIB release said. “Indian enterprise has to demonstrate its willingness to marry its economic interests with larger social responsibilities,” he declared.

New manufacturing policy

The government has now put in place new manufacturing policy to give a big push to the manufacturing sector, the Finance Minister said, hoping that such policy measures will enable states set up new investments and manufacturing zones across the country and create world class urban centres and also absorb surplus labour by providing them gainful employment.

The minister emphasized that since rapid development of infrastructure was the key to
sustain high growth and strengthening domestic growth dynamics, the government in the 12th plan period will seek to continue thrust on accelerating pace of investments in infrastructure since India needed to invest an additional 3-4 per cent of GDP on it to sustain current levels of growth and to equalize its benefits.

Private sector has a key role to play in infrastructure building, said Mukherjee, adding that the share of private and PPP investments in total investments during 12th plan is targeted at 50 per cent from the estimated 30 per cent in 11th plan period. In order to ensure improved flow of funds to infrastructure, government will continue to initiate policy measures in earnest.

The minister applauded FICCI’s agenda of ‘Empowering India’ “as our strength in the
next few decades lies in the availability of a vast youthful workforce, , but we cannot rest with advantage of demography”. He said the youth have to be suitably skilled to help realise the demographic dividend and underlined the need to greatly enhance the role of industry in skill development , particularly in setting up large scale sustainable skill development initiatives.

Harsh Mariwala, FICCI President, in his address outlined a five-point strategy to reach growth trajectory of 9 per cent per annum. His approach calls for sharing prosperity rather than being self-centred; working together instead of engaging in turf battles; empowering the people rather than entitling them, empowering India through concerted governance and building of trust between government, business, the various political parties; and its alliance partners.

The ‘Doing Business’ report brought out by the World Bank ranks India at the 134th position amongst 183 countries in terms of ease of doing business. To address the critical issues that domestic and foreign investors face in doing business in India, FICCI has launched the Empowering India project.

“We believe that without improvement in “public governance” and “procedures” it is not possible for India to remain globally competitive and sustain rapid growth. The project, therefore, attempts to bring about improvements in the delivery of public goods and services and in the regulations across states. The Empowering India project will improve some of the critical variables that affect investment activity,” Mariwala said.