Notwithstanding the uncertainty surrounding the global economic recovery, Prime Minister Manmohan Singh today said India should be able to sustain a growth rate of 8 to 9 per cent GDP growth.
He shared he was confident that India would come out of this crisis stronger but the road ahead was also going to be difficult to traverse.
"It is not not going to be easy but I am convinced that India's savings rate, which is as high as 35 per cent with a normal capital output ratio of 4:1, we should be able to sustain, with a little bit effort, a growth rate of about 8 to 9 per cent notwithstanding the difficulties on the international front," Singh told reporters accompanying him on his way back home from a four-day visit to Italy.
Against the backdrop of the world attempting a recovery from recession caused by the financial crisis in the heart of the developed world, he said he had discussions with the leaders of G-8 and G-5, Egypt and African countries.
"After our discussions, it is my sense that while there are some signs of recovery, the world economy is still a long way from recovering the earlier growth momentum and there must be questions whether that will soon be possible for the global economy."
The Prime Minister said he was returning home convinced that India must continue to strengthen steps at home to regain the 8 to 10 per cent growth path.
Singh added international environment would not not be as supportive as before for some time to come. "I am, however, confident that our domestic economic strengths will enable us to return to our earlier path of rapid and inclusive growth."
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He said that in his statement in the G-8,G-5 summit, he did mention that all available indicators for 2009 point to a deceleration in the US economy in the European Union economies and, therefore, one can say that the global environment for the development of the countries of the third world has undergone a sharp deterioration.
Singh noted that India's exports have suffered, capital flows from abroad have declined and international bank lending to the developing countries has declined.
"Therefore the challenge before us is to sustain and revive the growth momentum which we have built up in the last five years notwithstanding the deterioration in the international environment for development," he said.
Answering a question, Singh shared he had always viewed his government's role was to get rid of chronic poverty, ignorance and disease which still afflicted millions and millions of people.
"We have made some important gains in the last five years. We managed to impart to our country a stronger growth momentum. We strengthened the forces which make for inclusive social and economic development."
He mentioned that the government had put in place social safety nets which soften the harsh edges of extreme poverty substantially.
"But this is a long and arduous journey and our challenge is to take full advantage of the instrumentalities which are now now in place for inclusive growth to plug loopholes, to reduce leakages and to ensure that these instruments become more effective instruments of social and economic change, accelerated growth, more inclusive development and more emphasis on rural development and agriculture."
The prime minister said it was a continuation of the journey they undertook for five years with renewed commitment and determination even though it must be recognised that the international environment was not not as supportive as was imagined at one time.
To a question on the difficulties faced by the Information Technology sector in view of the global crisis, Singh replied the world financial system was the greatest source of demand for the IT services.
"I think things are stabilising — the global financial system seems to have reached a new plateau. It is not not a high growth. It is not not a high growth plateau. So I do expect there should be some improvement in the international environment for IT."
With regard to exports of textiles and garments, the Prime Minister said he did feel that the world economy could effectively stand up against protectionist sentiments, the demand pressures can move in the reverse direction as well.
"It is also possible to do more at home to create demand for IT services. I think in the e-governance processes in our own country, we have a vast unexplored market. And we can take full advantage of the global slowdown. The Indian Information Technology industry need not not face such a bleak future."