Ministry of Finance held a press conference here on Monday to take stock of the economic performance during the first half of the current financial Year (2015-16).
The conference was attended by Finance Secretary Ratan P Watal, Secretary of Department of Economic Affairs (DEA) Shaktikanta Das, Revenue Secretary Dr. Hasmukh Adhia and Chief Economic Adviser (CEA) Dr. Arvind Subramanian along with several other officials of Ministry of Finance.
The statement issued after the conference said that Indian economy would realise its '8 percent plus' growth potential with the government continuing to implement its reform agenda.
"With supportive policies in place, India is emerging as a strong growth driver for the world economy, capable of sustaining economic growth through its own momentum," said the statement, adding that the Government and the RBI are committed to keep the inflation under check.
"Inflation has been decisively brought down: the headline CPI inflation is within the target zone, WPI inflation has been negative for ten consecutive months, and core inflation has shown signs of moderation too. The outlook for inflation is also good, as indicated by the RBI in its latest Monetary Policy Review. Despite the uncertain Monsoon, Government food management, including use of the price stabilisation fund to augment domestic supplies with imports, will ensure that food inflation is contained," the statement said.
"The Government and the RBI will work together to consolidate the gains achieved in inflation control, through the inflation targeting framework and the associated institutional arrangements," it added.
It further stated that India's macro-fundamentals remain strong as fiscal and current account deficits have been reduced.
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"The Government is committed to achieving this year's fiscal deficit target as well as the fiscal glide path laid out in the budget. The Indian economy - based on a foundation of macro-economic stability, sizable foreign exchange reserves, and on creating the conditions for investment opportunities - is now better placed to handle external shocks. As a net oil importer, the global environment is also throwing up some opportunities for the Indian economy," the statement said.
"To support the economy, RBI has already announced a 50 bps cut in the policy rate, bringing the cumulative support of Monetary Policy to 125 basis points this calendar year. This should boost confidence and investment, and help shore-up the corporate balance sheets. The Government will play its part to ensure the benefits of accommodative monetary policy are transmitted to the economy at large," it added.
The statement said that government's systematic work restructuring the expenditure side of the budget have paid rich dividends in the last one year.
"While many commentators expressed doubt, we have simultaneously achieved 10 percent increase in tax devolution to the States, achieved over 30 percent increase in the Plan Cap-Ex, and yet, adhered to the fiscal glide path outlined in the Budget." it said.
"We continue to work together on rationalizing central sector schemes and programmes in run up to the Union Budget 2016-17. To give adequate time to the Ministries/Departments to reform their financial processes, this year the Pre-Budget Exercise has been advanced by two months to ensure structural reforms on the expenditure side can be completed in time for the Union Budget 2016-17," it added.
The top finance ministry officials also hailed the progress been made in the power sector over the last one and a half year.
"While much progress has been made in the power sector over the last one and a half year, the financial health of Dis-coms has received the highest attention of the Government. We are working with the Power Ministry and the States to find a lasting solution to this problem, in a manner that ensures the gains of fiscal consolidation made over the 12th and 13th Finance Commission periods are maintained, while preparing a financial restructuring plan that incentivizes Dis-coms to generate more revenues, and close the gap between average cost of supply and the revenues raised on sustained basis," the statement said.
"The collection of Direct and Indirect Taxes in the current year has been encouraging so far. If no other externality hits us, we are hopeful of achieving the total taxation target with possibility of a minor shortfall of around 5 percent within the total target of Rs. 14.5 lakh crore. The tax collections figure can be taken as a positive index of growth in demand in the economy," it added.
The statement also said that the government has taken decisive steps in the past few months to support improvements in the functioning and profitability of Public Sector Banks (PSBs).
"The Government has undertaken a set of reforms to address both systemic and governance issues, which include revamping the process of selection of directors on the boards of Public Sector Banks, laying of a road-map for a transparent and objective selection process for directors, separation of the post of non-executive Chairman and Managing Directors, etc," it said.
"On the capital side, an assessment of capital requirements for the next four years has been made and a plan has been put in place to ensure that PSBs remain adequately capitalized. To improve accountability, a comprehensive framework has been put in place in which banks are required to achieve specified quantifiable targets," it added.
It said that infrastructure spending has picked-up on the back of accelerated government spending on highways, railways and the power sector.
