Home Minister P Chidambaram today said that the country’s economy was expected to show an upturn by third or fourth quarter of 2009-10 and registering a 9 per cent growth by 2011.
While the economy is projected to expand by 7.1 per cent this year, the third quarter gross domestic product growth is estimated at 5.3 per cent. This would mean that the economy has to grow by 7.6-7.7 per cent during January-March, Chidambaram said, adding that it was something that looked difficult.
The minister was speaking at a conference organised by the International Bar Association. “Even until about two-three months ago, we were pretty confident that we will navigate this difficult year and end with a growth of a little over 7 per cent. In the first half of the current fiscal year, growth was 7.8 per cent. We were hoping that in the second half we will do 6.5 per cent. But the results of our third quarter GDP growth have been quite depressing,” he said.
Blaming the Western economies for weak regulation and being the originators of global economic crisis, Chidambaram said that regulations must always remain a step ahead of innovation. “The developed world has failed to live up to what it used to teach developing economies. Unless they set their house in order, the shadow of their failure will fall upon us and hurt us badly. The reward system in developed economies has become skewed and perverse,” said Chidambaram.
The former finance minister outlined six points or crucial steps needed to bring the economy back on the growth track. The first being encouraging people to save more. India’s current savings rate is at 35 per cent of its GDP. Boosting public investment in infrastructure, pruning government expenditure, stimulating domestic consumption and exports were the other focus areas identified by Chidambaram.
He admitted that India's fiscal deficit would be well above 6 per cent and pegged the revenue deficit at 5 per cent.
Talking about privatisation, Chidambaram said that it is a very restrictive ideology. “There is merit in having some public sector banks, insurance companies, oil firms and others so that there is a fair competition between public and private sectors,” said Chidambaram.