PTI Economic Affairs Secretary Arvind Mayaram (left) with Hari Sankaran, Chairman, FICCI Infrastructure Committee.
The Finance Ministry on Tuesday said the Indian economy will grow by over 5 per cent in the current fiscal riding on high farm productivity and investments, and promised more steps to boost growth.
"As we are seeing growth clawing back, I am quite sure that the environment will be conducive for further incentivising of growth and we will see whatever steps have to be taken," said Economic Affairs Secretary Arvind Mayaram.
Mr. Mayaram reiterated that GDP growth in the second quarter will be higher than in the first quarter with industrial production improving owing to a rise in electricity, construction and coal production and an increase in sown area by 9.1 per cent.
Economic growth in the April-June first quarter was 4.4 per cent, the weakest quarterly pace in four years. The economy grew 5 per cent in the year ended 31 March, the slowest in a decade.
"The Q2 GDP growth should be better than first quarter... The Finance Minister has said we need to incentivise growth. That continues to be the stand of the government. As far as the interest rate is concerned, it is completely the domain of RBI and Governor will take a call on that," he added.
With reference to the Current Account Deficit (CAD), he said it was expected to be less than $70 billion or 3.7 per cent of GDP for the full fiscal.
"We would certainly hope the CAD would be less than $70 billion. The $70 billion CAD will be fully and safely financed without any recourse to dipping into reserves," he said. The CAD, which is the difference between inflow and outflow of foreign funds, was at 4.9 per cent of GDP in the April-June quarter.
Referring to rupee, Mr. Mayaram said though it has stabilised, there is a need to remain vigilant and encourage capital flows. He said the FDI inflows this fiscal could exceed $24 billion.
"We need to be watchful. We need to continue to work towards encouraging greater capital flows. We are encouraged by the current stability in rupee," he said ruling out any immediate curbs on imports.
FDI inflow in April-June quarter was at $10.5 billion, against $8.2 billion in the corresponding period last year.
Mr. Mayaram said curbs on gold import announced by finance minister P. Chidambaram in August had started showing results. Gold imports shall be restricted to 800 tonnes in 2013-14, Mayaram told reporters, adding that the current account deficit will be restricted to $70 billion (3.7 per cent of GDP) or lower this fiscal year.
The government will not consider any immediate curb in imports, Mayaram said.
He emphasised that India will be able to attract sufficient capital inflows to fully finance its deficit.
On the fiscal front, Mayaram said the situation is under control and the government may not need to borrow more than the targeted amount.
"The higher plan spending in the first half of the year was deliberate to ensure speedier implementation of welfare programmes," he said. "Revenue collections are historically higher in the second half of the fiscal. The revenue targets will be met."
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