‘When Europe sees zero growth,our’s is likely to be 7% … you call it crisis?’

He said the current year is a tough one and the growth has fallen because of both global and domestic factors. “We hadn’t expected that Europe will face a sovereign debt crisis in 2011-12. However,we cannot fool ourselves that only global factors are responsible for the slowdown in our growth. The country has to put its acts together and put a system to reverse the process to go back to 9 per cent growth trajectory. We have to ensure the supply capacity to spur growth. Unlike China,our growth is more driven by domestic demand and consumption,’’ he said.

According to Ahluwalia,foreign investment in India is bound to happen as the country at 7 per cent growth has much higher growth than other regions like Africa,Latin America and other Asian countries. “We have also our own savings. There is no reason to believe that we cannot go back to 9 per cent growth trajectory. The good news is that inflation is falling. The bad news is that the balance of payment,currently at 3 per cent,is becoming a drag in achieving higher growth. I am sure it wouldn’t be permanent drag,’’ said.

Outlining a three-pronged strategy,Ahluwalia said the government should bring down the fiscal deficit. “We have found out earlier that when the growth accelerates,deficit falls,’’ he observed.

The government is already working out introduction of goods and services tax (GST) as part of reforms in indirect taxes. The bad news is that the government is not yet ready to implement the new scheme as different states and political parties are yet to reach a consensus on the issue. But the good news is that they are converging,he said.

Second,the government needs to cut down on subsidies by one to two per cent as it is unsustainable in its current level.

Later,talking to reporters on the sidelines,he said the government should end the oil subsidy to offset the additional subsidy burden arising out of the new Food Security Bill.

Third,the country has to increase its productivity and increase the pool of skilled people. “Our labour force is rising while many countries including China will witness a fall in the labour force,’’ Ahluwalia said.