Washington: Indian economy is now clearly on a recovery path with a 7.4 per cent growth in the first three quarters and the new government is committed to maintain overall macroeconomic conditions on a sustained basis, Finance Minister Arun Jaitley has said.
“We are committed to maintain overall macroeconomic conditions on a sustained basis so that the Indian economy is able to achieve and sustain growth of 8 per cent and above,” Jaitley said in his address to the International Monetary and Financial Committee.
“The Indian economy is now clearly on a recovery path,” he said, adding India’s growth recovered to 7.4 per cent in the first three quarters (April-December) of 2014-15 as compared with 7.0 per cent during the same period of 2013-14.
Advance estimates have also placed the GDP growth for the full year of 2014-15 at 7.4 per cent.
Medium-term growth prospects have also improved following recent policy initiatives towards unlocking coal and other mining activity, liberalisation of FDI limits and a renewed thrust on public investment in infrastructure, which would help to improve the investment climate.
Inflation, which was a major concern for India during 2010-13, has moderated significantly, he said.
CPI inflation, which is now used as the main measure of headline inflation by the Reserve Bank of India (RBI), declined to 5.2 per cent in March 2015 from 11.2 per cent in November 2013, he said.
In terms of the flexible inflation targeting framework adopted recently, going forward, the RBI will seek to bring the inflation rate to the mid-point of the band of 4 +/- 2 per cent, i.e., to 4 per cent by the end of a two year period starting fiscal year 2016-17, Jaitley told the world body.
Noting that India has continued on the path of fiscal consolidation, he said the GFD of the central government, which was 5.7 per cent of GDP in 2011-12, declined to 4.1 per cent in 2014-15 and is budgeted to decline further to 3.9 per cent in 2015-16.
India’s current account deficit (CAD) declined sharply from 4.8 per cent of GDP in 2012-13 to 1.7 per cent in 2013-14 and is expected to decline further to 1.3 per cent in 2014-15.