With India retaining the fastest growing large economy tag post latest GDP numbers, Finance Minister Arun Jaitley Wednesday said the country is on an “upward curve” and a good monsoon, GST passage and increased infra and rural spending will further accelerate the growth.
With pro-growth policies helping gross domestic product grow as faster-than-expected 7.9 per cent in January-March quarter and 7.6 per cent in the entire 2015-16 fiscal, he asserted that these are not “stray figures” and an analysis of the pattern shows inherent strength in the economy.
Also aiding was the growth in output of eight core sectors growing 8.5 per cent in April on the back of pick up in output of refinery products, fertilisers, steel, cement and electricity.
“Last two years, a number of factors were loaded against us – there was a global slowdown and we had two consecutive below normal monsoon rainfalls,” he said, adding that people are surprised how India has managed to grow at the fastest pace in the world.
Going forward, “reform process is going to continue. Hopefully, Goods and Services Tax (GST) bill is passed (in ensuing monsoon session of Parliament), which has the potential to add to GDP growth. Also, our infrastructure and rural spending will add to that,” he said commenting on the latest GDP numbers.
On the forecast of a good monsoon this year, Jaitley said it “would mean an increase in agriculture production, more purchasing power and rural demand.”
On the growth clocked in 2015-16, Jaitley — who is on a six-day investor wooing tour of Japan — said, there was improvement in the agriculture as well as the services sector. “More importantly, there is a consumer demand and there is increased consumer spending,” he added.
The GDP expansion in January-March period bettered 7.2 per cent of December quarter and helped extend the lead over China, which grew 6.7 per cent in the March quarter – the slowest in the world’s second largest economy in seven years.
Earlier speaking at a meeting organised by Japan-India Business Cooperation Committee, he said investors looking for higher returns should park funds in India’s infrastructure and manufacturing sectors.
“As growth would return to the world, consumer spending would pick up, hopefully the monsoons would be better, this trend which has been set in India itself could be improved upon. That we are on an upward curve seems evident,” he said.
Jaitley said the Indian economy clocked 7 per cent growth rate in every quarter last fiscal despite an unsupportive global economy and two consecutive years of weak monsoon.
This has been possible because of increased public spending, the performance of India’s private sector and the confidence which foreign investors reposed in India by investing the highest ever even in the slowdown years, he added.
“I’m sure Japanese investors and funds and other agencies who are looking forward for gainfully employing their resources would certainly look at the India story which offers attractive destination for investment,” the Finance Minister added.
He said that besides infrastructure, the manufacturing sector is the top most priority and provides very large opportunity to international investors to participate in India growth story.
India offers flexibility to investors, Jaitley said adding that impetus on ‘Make in India’, increased infrastructure and rural spending would help push growth.
“The returns that India offer are extremely attractive compared to other destinations, the magnitude and volume of investment required is much larger and it’s for a reasonable period of time that this investment is going to continue because infrastructure deficit has to be met,” Jaitley added.
The Finance Minister said the Indian government is now continuing on the reform trajectory which was left undone in 1991 and people have become aspirational and are supporting reforms.
“India today is passing through a very critical phase in its history. In 1991 we had a very important reform programme which was initiated, it proved to be very successful. We continued on that roadmap and I think what was left out is now being implemented. There is never a last day in the calendar of reforms, situations are dynamic, they keep changing, they keep progressing. Newer challenges come up and we expect newer responses from the government,” he said.
He said Japanese companies have become household names in India starting from automobiles to household appliances to also the Delhi Metro.
“Our industrial corridors are being built with Japanese assistance and I am sure the ambitious Bullet Train project between Mumbai and Ahmedabad once implemented will be absolutely a showpiece in India’s economic development,” he said, adding currently there are over 50 projects of different magnitudes being implemented in India today.
“I don’t see a period which is very far off where almost every major city in India which aspires to have a local transport system based on Delhi Metro to become reality,” Jaitley added.