)
Urging investors not to panic and have confidence in India’s growth story, Commerce and Industry Minister Anand Sharma on Wednesday pegged the GDP growth rate for FY14 at 5.5 per cent.
“We had a very good monsoon, we are going to have a bumper harvest. Agricultural produce itself is going to add at least a percentage and half to our GDP growth. Overall, we will finish the year in a robust position. At least, five and a half per cent growth of GDP,” Sharma told reporters here.
He said that while there is no denying that challenges exist, the economy is in a sound position. “Macro fundamentals of the Indian economy are strong. If we look at savings rates, national investment rates, even the debt-to-GDP ratio has been brought down. Markets have come down but this will go up also, same is the case with rupee, there is no reason why this shouldn’t be back. Because the rupee will definitely find its true value and it is much higher then what it is today or what it was yesterday,” he highlighted.
“We had a very good monsoon, we are going to have a bumper harvest. Agricultural produce itself is going to add at least a percentage and half to our GDP growth. Overall, we will finish the year in a robust position. At least, five and a half per cent growth of GDP,” Sharma told reporters here.
He said that while there is no denying that challenges exist, the economy is in a sound position. “Macro fundamentals of the Indian economy are strong. If we look at savings rates, national investment rates, even the debt-to-GDP ratio has been brought down. Markets have come down but this will go up also, same is the case with rupee, there is no reason why this shouldn’t be back. Because the rupee will definitely find its true value and it is much higher then what it is today or what it was yesterday,” he highlighted.
While the Rupee plummeted to 68.85 against the dollar, it closed at 68.80, the biggest ever single-day fall since 1995 as foreign investors continued to pull out of the country.
“It will take time but results will be positive. We have definitely hit turbulence, there are strong headwinds but we are not the only economy it’s a global development right from Brazil to Russia south Africa and other economies both the currencies and the markets have been adversely impacted,” Sharma said.
While Brazilian real, Turkish Lira, Mexican Peso, Malaysian Ringgit, Thai Baht have all been falling, the Rupee seemed to have crashed, plunging by 20% since April.
Amid various measures that the government is taking, it is trying to push merchandise exports to earn foreign exchange. According to Sharma, exports have done well in the first four months of this fiscal and forward bookings of exporters are also “encouraging” which means exports might rise in the months to come.
But he was also quick to add that this was because of increase in manufacturing and not because of the falling Rupee.
“I remain positive we would bring down trade account deficit. I am not quantifying but if we do that it will have positive influence on current account deficit (CAD) situation. I do not go by the conventional wisdom that a depreciating rupee is going to enhance the export. That is not going to be the case as long as long as import component of our exports remain substantial. Secondly what about our imports? We end up paying more for that and it’s a matter of worry,” he said.
