FM admits drop in economic growth

Projecting a fall in GDP (gross domestic product) growth rate to 5.8 per cent from the estimated 7 per cent in the current financial year, Sinha said the strategy would be to contain fiscal deficit, increase exports, push up reforms and ensure a transparent public administration.

But the positive aspect is that –even on a 6-5.8 per cent growth rate concerns are being expressed. This is a good sign that expectations have gone up in recent years as compared to the time when the country was achieving a Hindu rate of growth," he told the seminar on ‘Civil Services and the Constitution’ here.

He said the government was also committed to see that increased growth was accompanied by the other social objectives of eliminating poverty and generating more employment. The Finance Minister laid more emphasize on exports to boost growth in the economy saying India has to explore new markets for its products in the international arena.

He said the Indian economy was not inert to changes in other parts of the world like those in Latin America and South East Asia. Expressing seriousness about carrying out the reforms process, he said the government would introduce the Fiscal Responsibility Bill in the winter session of Parliament.

"We also have to ensure transparent public administration," he said, adding "people are not going to be satisfied with slogans and assurances. We have to deliver the goods as fast as possible." Sinha said a Constitution Review Commission would be set up to suggest major changes in legislations in order to improve the functioning of the government.

EEB adds: The Reserve Bank of India and the Centre for Monitoring Indian Economy (CMIE) have last month revised GDP growth downwards. However, Sinha refused to admit then that the economy has slowed down and made several arguments refuting the ‘slowdown theory’.

The RBI has pared the country’s real Gross Domestic Product in the current fiscal to around 6-6.5% as against the previous projection of 6.5-7% in its April monetary and credit policy. The GDP figure had been arrived at by the apex bank, by taking first quarter (April-June) data of Central Statistical Organisation which placed the real GDP growth at 5.8 per cent as against 6.9% observed in the first quarter of 1999-2000, RBI said in its mid-term review of monetory and credit policy for 2000-01.

The bank said the rate of inflation on a point-to-point basis, as on September 23, 2000 had almost doubled to 6.06 per cent as against 3.20 per cent a year ago. ‘‘On an average, the annual inflation rate stood at 4.96per cent as against 4.37 per cent last year,’’ the RBI said.

It has attributed the rise in inflation to a 25.9 per cent increase in the index of fuel, power, light and lubricants, particularly in the mineral oils. ‘‘This is a consequential impact of the substantial risein international oil prices since September 1999,’’ it said, adding the increase in prices of other items among both the primary articles and manufactured products, except fertilisers, were subdued.The CSO, in their recent release, has placed the real GDP growth in the first quarter (April-June) of 2000-01 at 5.8 per cent as against 6.9 per cent observed in the first quarter of 1999-2000. Taking the first quarter estimates into account, as per present indications, the real GDP growth during 2000-01 can be placed in the range of 6.0 – 6.5 per cent as against the projection of 6.5 – 7.0 per cent indicated in the April policy statement.