India on turnaround path, says Pranab Mukherjee
11 Jun 2012
Union finance minister Pranab Mukherjee today said the government was fully seized of the current economic situation and that he is confident of a turnaround in the country's growth prospects in the coming months.
The finance minister was reacting to an S&P report suggesting that India could be the first BRIC country to falter. Mukherjee said this is not based on a fresh rating action. S&P had reaffirmed India's sovereign credit rating at BBB(-) on 25 April and nothing much has changed since then. (S&P, however, had revised India's outlook to negative from stable).
''Between April 2012 and now, there are no significant events to indicate that the economy's vulnerability to shocks has increased, though growth numbers for the fourth quarter 2011-12 have come below the expectations,'' Mukherjee said.
He said the S&P's recent report suggests that the main factor that would determine India's investment grade credit rating is the ''government's reaction to potentially slower growth and greater vulnerability to economic shocks.''
''There are several positives for the Indian economy as we go forward. He said that RBI has reversed the interest rate cycle by announcing a cut of 50 basis points at its last review of monetary policy; mining sector growth has turned around, progress has been made on fuel linkage for coal based power projects; there is a turnaround in the quarterly investment growth rate, which had been negative in the third quarter of 2011-12; a normal south west monsoon has been predicted for 2012-13 and there has been a decline in international oil prices in recent weeks,'' he added.
As for foreign institutional investors (FII), Mukherjee said, there have been renewed interest and FIIs have already poured in $12 billion in the first five months of the current calendar year (up to 9 June 2012) as against FII inflows of $8.3 billon in the full calendar year 2011. This also the highest for the past five years for the similar period,
Similarly, the fiscal year 2011-12 has witnessed gross FDI flows of $46.8 billion, as against $34.8 billion in the fiscal year 2010-11, the minister added.
Further, Mukherjee said there are no major adverse results on corporate performance in the last quarter of 2011-12. All these factors should help in the recovery of domestic growth momentum, he added.
.webp)
