M A I N   N E W S

PM admits growth rate may fall below target
Says economy faces tough times, govt trying to ensure turnaround
Sanjeev Sharma/TNS

what PM said
Some new reform measures on the anvil include a Free Trade Agreement (FTA) with the European Union
Along with, there will be measures to boost the FDI
Hints that the increase in short-term rates by the RBI is temporary

FDI norms
The PM assured the industry that the government will further relax FDI norms and the Reserve Bank will soon start granting bank licences
He hoped that the impact of the reforms will boost economic growth in the second half of this year
The government on July 16 decided to hike FDI in telecom, insurance and defence
He said a new bank licensing policy has been announced

New Delhi, July 19
Acknowledging that the economy is going through difficult times, Prime Minister Manmohan Singh said today that the growth for the year is likely to be lower than the 6.5 per cent target put out in the Budget.

However, Manmohan Singh emphasised that rather than the exact number for growth more important was the economy turnaround from the 5 per cent achieved last year.

He asked the industry leaders to shun negative sentiments and assured them that the government will do everything so that the economy rebounds.

“I would not like to make a forecast of what our growth will be in the year 2013-14. The IMF has recently reduced its earlier projection of growth rates for all countries, including India, for 2013,” he said at the Assocham AGM here.

“We had targeted 6.5 per cent growth at the time the Budget was presented. But it looks, it would be lower than that,” he said.

The Prime Minister said there is a very good chance of a turnaround given the good agricultural performance and the effect of the various actions initiated by the government on infrastructure.

Terming the fluctuation in the rupee as the “most immediate worry”, he said this was due to withdrawal of funds from the emerging markets and the high current account deficit. The government, he said, was committed to bringing down the current account deficit by curbing demand for gold and reducing under-recoveries on petroleum products.

Hinting that the recent increase in short-term rates by the RBI is temporary, the Prime Minister said these steps are not meant to signal an increase in the long-term interest rates.

“They are designed to contain speculative pressure on the currency. Once these short-term pressures have been contained, as I expect they will be, the Reserve Bank can consider reversing these pressures”, he added.

Some new reform measures on the anvil include a Free Trade Agreement (FTA) with the European Union that will be signed soon. Alongwith, the Prime Minister said, there will be measures to boost FDI that were announced recently.

Manmohan Singh pointed out that when things are going bad, it is the responsibility of the government to become pro-active. He listed several reform measures taken in the last one year to boost investment and growth.

These include new infrastructure projects, direct benefit transfer, PSU investment, sugar decontrol, revision of gas prices, correction of railway fares and improving the viability of road projects, among others. Highlighting the UPA regime’s performance, Manmohan said the average growth rate during eight years, 2004-05 to 2012-13, was 8.2 per cent. This is much better than 5.7 per cent achieved in the previous eight years.

Emphasising that the percentage of the population below the poverty line declined at a much faster rate of 2 per cent between 2004-05 and 2011-12, he said, the rate, however, was just 0.75 per cent before 2004-05.

“I think this is a record that any government can be proud of. I agree we have had one bad year. I assure you we will get out of it”, he said.





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