The Prime Minister, Dr. Manmohan Singh, on Thursday defended the Indian economy while giving an interview to an Indonesian newspaper, and said that the country's economic fundamentals remain strong, which can restore growth back to 8 percent per year in the short to medium term.
"If you leave aside last year's economic performance, in the previous nine years, the Indian economy has grown at an average annual rate of about 8% per annum. This is the highest rate of growth achieved by India in any previous decade. Last year, our growth rate declined to about 5%, partly because of the recession in the global economy, including the Euro zone and slow growth in US and Japan,"
"However, our economic fundamentals remain strong. Our savings and investment rates are still over 30% of GDP. Given our capital output ratios, we can restore the growth momentum to 8% per year in the short to medium term. We have taken a number of reform measures to boost domestic investments, attract more foreign investments, strengthen the financial sector and improve and simplify the tax regime. We have launched a broad range of entitlement programmes for the vulnerable sections of our population that require special attention of the government. And we are purposefully addressing the fiscal and current account deficits," he added.
Dr. Singh also said that India would continue to persist with the open trade regime, and remained confident that the impact of the UPA's measures wpuld be visible soon.
"India imports nearly 80% of its oil requirement and rising oil prices and slump in exports have hurt our trade balance. There are also some supply side bottlenecks in India, which we are addressing through policy and administrative reforms," he added.
Dr. Singh also commented on the impact of the global downturn on India and said that a sustained economic recovery globally would help bail out India from its present downturn.
"Emerging economies have been affected by the prolonged global economic crisis and uneven and uncertain recovery. Slowdown in our exports and in inward flow of investments has affected growth and balance of payments. The unconventional monetary policy followed by major developed countries and expectations around its reversal had induced huge volatility in the financial and currency markets," he said.
" India and Indonesia are part of the G20. The need for enhanced international coordination and communication on policies was emphasized at the G20 Summit in St. Petersburg in September. Sustained global economic recovery will benefit emerging economies," he added.
Dr. Singh also noted that each country needs to take appropriate national measures to accelerate economic growth, attract foreign investments and boost exports, including by leveraging the competitiveness generated by currency depreciation.
Dr. Manmohan Singh left for Indonesia from Brunei earlier, where he will be accompanied by External Affairs Minister Salman Khurshid and Union Commerce and Industry Minister Anand Sharma.
In his departure statement, Dr. Singh said: "My visits to Brunei Darussalam and Indonesia will further intensify our engagement to our East, which has been at the forefront of our foreign policy, and contribute to peace, prosperity and stability in the Asia Pacific.
