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Encouraged by better-than-expected growth in the July-September quarter, Finance Minister P Chidambaram today expressed confidence that the economy would expand by 5% and the fiscal and current account deficits would remain within limits, notwithstanding the present stress.
"We are going through a period of stress but there is a ground for optimism... We hope things will become better in the second half of the current fiscal (2013-14). We hope to achieve a growth rate of 5%," he told reporters.
Chidambaram based his optimism on several factors such as improvement in Current Account Deficit, output of the services sector and recovery of exports.
The Reserve Bank data showed today that decline in gold imports and turnaround in exports helped narrow India's CAD sharply to USD 5.2 billion, or 1.2% of GDP, in the July-September quarter of the current fiscal.
"We are satisfied with 4.8% growth in Q2 versus 4.4% in Q1 (April-June). We are looking forward to better performance in Q3 and Q4," Chidambaram said.
The economic growth had slipped to decade's low of 5% in 2012-13, and during the first quarter of the current fiscal it was 4.4%.
Several global institutions including World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB), as well as independent experts have projected growth rate of below 5% for 2013-14.
Chidambaram said that with the recent improvement in some important sectors like manufacturing, better performance of exports as well as certain steps taken by the government the economy can be expected to show further improvement.
He also expressed the confidence that government will be able to achieve the disinvestment target of Rs 40,000 crore and contain the fiscal deficit within 4.8% of the GDP.
"The fiscal deficit at the end of any month does not give a true picture as expenditure is front-loaded and revenues are usually back-loaded. We will contain fiscal deficit at 4.8%," he said.
