Mumbai: Disputing the Central Statistical Organisation growth figures that ignored signs of turnaround, Finance Minister P Chidambaram on Saturday exuded confidence that economy would clock a higher 5.5 per cent growth in the current fiscal and 6-7 per cent in 2013-14. "While 5 per cent growth rate of CSO is low and is a matter of concern...we believe growth will be closer to 5.5 per cent rather than CSO's estimate of 5 per cent...it is possible to get back to that growth path provided we follow prudent and sound policies, invest in our economy, stimulate demand, encourage entrepreneurship and risk taking", he said.
The minister, who was on a whistle-stop tour of the financial capital, launched the Rajiv Gandhi Equity Savings Scheme (RGESS), IL&FS's Infrastructure Debt Fund (IDF) and new stock exchange MCX-SX. Besides, he also attended programmes organised by State Bank of India and Punjab National Bank. Chidambaram said the green shoots were visible and with prudent and sound policy "we can recapture the magic of 2004-08. The average growth was 8.5 per cent during that period."
The minister further said that CSO estimate of 5 per cent for 2012-13 was not the lowest of the decade. "It is still higher than the two record lows of 2000-01 and 2002-03. There are signs of upturn and that will take us back to high growth path," he added. Chidambaram said, "Why should we, without any reason, denigrate our own performance and record? I have no doubt in my mind that we will come out of trough and we will climb back to growth rate of between 6-7 per cent next year and then between 7 and 8 per cent in the year after."
He said the economy would perform better than the 5 per cent growth forecast by the Central Statistical Organisation last week.
Appearing to fault the CSO's methodology, Chidambaram said the estimate of 5 per cent growth by CSO is rather based on "dated data". "In the second half (of current fiscal) there are indications of green shoots in the economy", he added. The CSO has extrapolated data for April-November into the year, he said, adding, "while that would be normally correct when the trend line continues in the same direction, when the trend line changes, extrapolation is not the method that the institution should follow to project the future.
"We believe that the upturn has begun, it is a very low curve, it's not V-shaped upturn. It's perhaps a very long and shallow U but we believe that the upturn has started and we believe that in the second half of this fiscal there are indications of green shoots in the economy," he added. CSO's advance growth estimate of 5 per cent earlier in the week for the current fiscal has evoked sharp reaction from Finance Ministry which said that it has based the projection on data available till November, and ignored the signs of uptrend.
The minister said that government will be taking steps in the "remaining weeks of this month of this fiscal year and measures that we will take going into the next fiscal year will be measures that will put India back to 8 per cent growth path." India, he added, was still the fastest growing economy in the world after China, Philippines and Indonesia. Chidambaram said while the 5.5 per cent growth rate is "satisfactory", for India a 8 per cent growth rate is
imperative to generate jobs to provide employment to young people.
"The measures that we have taken...and will take in the coming days will put India to 8 per cent path," he said, adding that upturn has started. The Indian economy grew by 5.4 per cent in the first half of the current fiscal. "Economy is indeed challenged. But I am confident that we will come out of the trough and we will climb back to high growth path," he said. Chidambaram said the high growth path can be achieved with prudent and sound policy. "We can recapture the magic of 2004-08. The average growth was 8.5 per cent during that period," he said.
The minister also said while 5 per cent growth rate of CSO is low and is a matter of concern, it is not the lowest growth in the decade. It is still higher than record low seen in 2000-01 and 2002-03, he said.