PM stresses need for action to return to 8 % GDP growth

Prime Minister Manmohan Singh today said the current the 5 per cent growth in GDP was ''clearly disappointing'', and that speedy and decisive actions were needed to return to 8 per cent economic growth.

Addressing the Confederation of Indian Industries (CII) annual general meeting in New Delhi, Singh stressed that his government was moving decisively to achieve an 8 per cent level, and that higher growth too was achievable.

In his speech to India's top business leaders, the prime minister said the slump in growth was not something the United Progressive Alliance government could entirely help. He added that the government was moving forcefully on factors that were in India's control.

He said the government will further relax the foreign direct investment (FDI) policy and take steps to bring down inflation.

Singh also said India can get back to a high growth path even while dealing with problems like corruption, bureaucratic inertia and the difficulties in managing a coalition government.

"Growth has slowed to 5 per cent, which is clearly disappointing ... we are seeing a temporary downturn, partly due to global factors. We can get back to 8 per cent growth rate," Singh said.

He also said the government's high fiscal deficit is unacceptable, and "We are determined to do everything possible to achieve the fiscal deficit target."

The government aims to bring down the fiscal deficit to 3 per cent of GDP by 2016-17.

As regards the Current Account Deficit (CAD), he expressed hope that it would moderate in the current financial year from a high of 5 per cent recorded in 2012-13.

The government, he said, will take all steps to ensure that foreign fund flows remain strong and restore the macro-economic balance.

"Corruption is a problem. Bureaucratic inertia is a problem. Managing a coalition is not easy. But these problems have not arisen suddenly. They were all there even earlier when the economy was growing at 8 per cent," Singh added.

He further said, "The business mood which was unduly optimistic in 2007, and is unduly pessimistic today ... I would urge Indian industry to have faith in our determination and avoid getting swamped by negativism."

He said fiscal expansion has led to an expansion in the CAD, which is expected to be around 5 per cent of GDP in 2012-13.

"We financed a CAD of $90 billion in 2012-13 without a loss in foreign exchange reserves," he said, adding the government will take all steps to "ensure that inflows remain strong for the next two years".

Singh said the Cabinet Committee on Investment (CCI), set up in December 2012, has made significant progress in clearing large projects which were held up for long.

In the petroleum sector, he said investments worth $20 billion for exploration and production activity in 40 oil blocks had been held up for many years because of security clearances.

"The CCI has made a difference. Clearances have been given for 5 blocks. We hope to resolve issues relating to another 31 blocks within the next two weeks.

"I believe the progress we have achieved is particularly significant because these blocks were awarded many years ago, but were held up for want of clearances," he said.

The prime minister further admitted that fuel supply - both coal and gas - to power projects has been posing problems.

"The ministries are working to reach a resolution of these problems in a time bound manner. I hope we will see results in the next three weeks," he said.