'I'm not a great storyteller but have a good story to tell'

The finance minister says India's potential growth rate is 8%, the country cannot afford to become complacent and sit back

As the Reserve Bank of India (RBI) today emphasised the need for non-monetary policy action to boost growth, the government said it would consider a number of legislative and non-legislative steps to prop economic activity.

“I’m not a great storyteller, but have a good story to tell...I expect India’s growth to be robust and sustainable. I am confident it would gather further momentum in the coming years...The FDI (foreign direct investment) regime in areas such as multi/single-brand retail and aviation have been further liberalised and I am confident there would be forward-movement in areas such as insurance and pension,” Finance Minister P Chidambaram said at the Asian Development Bank (ADB) conference here.

He said India shouldn’t be satisfied with five per cent growth and would revert to eight per cent growth by 2015-16, after recording gross domestic product (GDP) growth of more than six per cent this financial year and seven per cent in the next. For 2012-13, it is expected GDP growth would fall to five per cent, after growing 6.7 per cent, 8.6 per cent, 9.3 per cent and 6.2 per cent in the four years from 2008-09 to 2011-12, respectively. Global economic growth slowed from 3.9 per cent in 2011 to 3.2 per cent last year. It is expected it would recover to 3.5 per cent this year.

Chidambaram said India had taken various steps to tackle the economic slowdown and fiscal stress in the past few months and these measures had started taking effect. He said though the persistent global slowdown had hit India hard, various domestic factors, too, had taken a toll.

“For 2012-13, our fiscal deficit is estimated at 5.2 per cent. We may better this target. Budget 2013-14 estimates a fiscal deficit of 4.8 per cent. If it turns out I did better last year, I would be obliged to do better this year, too. I am confident this would steadily reduce to three per cent or even less by 2016-17,” he added.

Chidambaram, who recently conducted road shows abroad to attract foreign investment, made a strong pitch to sell the India story at the ADB conference, too. He highlighted India’s strong fundamentals, its high growth potential, its demographic dividend and its capacity to absorb infrastructure investments.

Economic Affairs Secretary Arvind Mayaram said the government had been taking steps to revive investment. He assured this year, growth wouldn’t be below six per cent. “The growth rate will surprise everyone. Investments are picking up, there are green shoots, the sentiment is improving and FDI is increasing. I have absolutely no doubt you would see positive movement in these,” Mayaram said.

He said this year, the current account deficit wouldn’t be less than five per cent, as exports were picking up and there was no reason to believe capital flows would be low.

Chief Economic Advisor Raghuram Rajan said the government would consider a number of non-legislative steps to prop economic growth. He made a strong pitch for more FDI into the country and cautioned very high marginal tax rates. “We are trying to get those (stalled) projects back on track…that would be the most immediate thing we can do...We are also trying to resolve coal pricing. There are a number of non-legislative actions the government could do in the next few weeks,” he said.

Even as RBI pegged economic growth for 2013-14 at 5.7 per cent, Rajan stuck to the government’s forecast of more-than-six-per-cent growth.