 "UPA will come back to power, says Chidambaram")
He also reminded Carnegie institute which is planning to set up research body on India's political economy that the United Progressive Alliance government will be voted back to power in the general elections in 2014.
"I know that the World Economic Outlook report (by IMF) does not share my optimism, but I may tell you that we do not share their pessimism," Chidambaram said in his address to Carnegie Endowment for International Peace in Washington.
It is not that only IMF has forecast India's economic growth to be less than five% in 2013-14. Almost every independent agency, with the World Bank being an exception, has pegged it below five%, while the governemnt has projected it to be over 5%.
"With very good rainfall in the current year and a sharp increase in the sown area, we expect robust growth in farm output. We have also taken numerous reform measures over the past one year. We believe that the Indian economy will grow at over 5% and perhaps closer to 5.5% in 2013-14."
Set against the current global economic background, even a growth rate of 5% looks good, but is much lower than the ambitious standards that the country set in 2004. "I would be the first person to say that we need to do better and recapture the growth momentum of the last decade."
The finance minister said the measures taken by the government coupled with normal monsoon would show their impact from the second half of the current financial year.
India's economy grew a decade low of five% in 2012-13. Hopes of early signs of recovery were dashed when the growth crawled to a four-year low of 4.4% in the first half of 2013-14.
Chidambaram attributed to fall in growth since 2011-12 after a brief recovery to global factors as well as emergence of domestic constraints on investment and consumption.
Pointing out that some of the worst-affected countries of the Euro zone are showing signs of recovery with significant improvements in their current account and fiscal deficits, the finance minister cautioned that there may be possible ‘bumps’ on the road ahead.
He said the expectations of improvement in the economic and financial conditions of US, coupled with the decision of the Fed to postpone the tapering of the quantitative easing, have shaped expectations of a gradual global revival.
Chidambaram, who will also woo US investors to pump money in India, said while the economy has greatly deregulated, there is much more to be done.
"However, looming large is the issue of State capacity. We need a State that has in place institutions to resolve market failures. We need a State that will deliver public goods quietly, efficiently and economically. This is the prime challenge in India today."
Carnegie is in the midst of establishing a Carnegie South Asia Centre based in New Delhi. One of the key prirorities of Carnegie is to build a research programme on India's political economy.
"...may I tell you in advance that your study will discover that India will vote my government back to power. I thought I may caution you lest you should waste too much time and effort to figure this out," Chidambaram said.
Carnegie has Tata Group chairman emeritus Ratan Tata and chairman and group CEO of Bharti Enterprises Sunil Mittal on its Board of Directors.