Green Shoots of Economic Recovery taking Firm Roots says FM

Green shoots of economic recovery are now firmly taking roots in the country, and in the next two-three years the economy will resume the pre-crisis growth rate of 9% per annum which will be both inclusive and widespread according to Mr. Pranab Mukherjee, Union Finance Minister. He stated this at the 104th Annual Session of the PHD Chamber held today at New Delhi.

The economic recovery underway is a testimony to the resilience of the Indian industry and vindicates the role of stimulus packages which were announced by the government to soften the impact of the global financial crisis on the Indian economy, according to the Finance Minster. He stated that the government will take a call on the withdrawal of the stimulus package at the time of the next union budget.

The Finance Minister indicated that he expects the economy to grow by 7.5 to 8.0% in the current fiscal. Even though the agriculture sector will decline on account of the poor monsoons and also floods in some areas, the overall negative effect on the economy will be tempered by the good performance of the industry and services sectors. This is borne out by the fact that industry, the major driver of economic growth, is showing signs of recovery. Similarly, the services sector has shown relatively less deceleration in growth. He added that the target growth of 9-10%, which the country had for long dreamt about, is now within our reach and we need to do our utmost to bring our dream to fruition.

The Finance Minister maintained that despite the discernable improvement in our economy, the path is still strewn with many challenges, both domestic and global. In the short to medium term, the price rise, fiscal consolidation, generating resources for development programmes, strengthening public delivery mechanisms, health and sanitation and bridging the skill gap are major challenges. There are regional variations in education which need to be bridged. Vocational education should be reoriented in such a way that imbalance between supply and demand is gradually bridged. Development of quality infrastructure and creating a rural-urban balance are crucial for sustaining growth. The Finance Minister said that the growth impetus also requires taking steps towards productivity improvement, a focus on R&D and innovation - both in product and processes.  

Sustained economic growth remains a high priority for the government and we are working towards making growth more inclusive. Agrarian reform is a cornerstone for India’s future development strategy. The government is committed to increase public investment in rural infrastructure according to the Finance Minister.

The Finance Minister said that the government is doing its best to ensure procedural simplification and initiate facilitation measures to make our tax regime more simple, cogent and user-friendly. The endeavour is to increase compliance, widen the tax base and reduce the tax rates. In this context, the decision to introduce the goods and services tax (GST) and the unveiling of the draft direct taxes code (DTC) assumes importance. The road map for GST is under finalisation and the government is open to suggestions from the various stakeholders, including industry, on the DTC.

The Government is also actively encouraging public-private partnership (PPP) in development of quality infrastructure in areas such as power, energy, rural connectivity, urban development etc. Several efforts have been undertaken to address the problem of viability gap funding.

The Finance Minister also presented the PHD Chamber Annual Awards for Excellence 2009. The Recipients were (1) Lifetime Achievement Award – Dr. Brij Mohan Lall Munjal, Chairman, Hero Group of Companies; (2) Good Corporate Citizen Award – Jubilant Organosys Ltd. (received by Mr. Shyam S Bhartia, Chairman & Managing Director); (3) Distinguished Entrepreneurship Award - Mr. Pawan Jain, Chairman & Managing Director, Safexpress Pvt. Ltd.; (4) Outstanding Businesswoman Award - Ms. Vinita Singhania, Managing Director, JK Lakshmi Cement Ltd.; and (5) Award for Outstanding Contribution to Social Welfare - SOS Children’s Villages of India (received by Mr. Rakesh Jinsi, National Director).

Earlier, Mr. Satish Bagrodia, President, PHD Chamber, stated that the monetary and fiscal stimulus package should continue for some more time so that the nascent industrial recovery gained maturity and also for the RBI to maintain policy rates at the current levels to prevent the growth momentum from slackening.

The inaugural session was followed by a lively panel discussion with a few eminent journalists.

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