Commerce and Industry Minister Anand Sharma has brushed aside the slide in India’s economic growth rate to 4.4 per cent in the April-June quarter, the worst in over four years. Arguing that the country’s growth story could not be written off as yet, he told a gathering of exporters in Mumbai that the gross domestic product (GDP) would bounce back to 5.5 per cent soon.
“Wait for the next quarter. The country's foreign exchange reserves are at a satisfactory level. The Government's foreign debt is nearly nil,” he told the small group of exporters at the inauguration of the Federation of Indian Export Organisations’ new premises.
Though the April-June 2013 quarter has recorded the worst quarterly growth in India’s GDP since the January-March quarter of 2009, the year of the global financial crisis, Sharma was categorical that it was nowhere like last time. He said the combination of large fiscal and current account deficit and India's insatiable appetite for gold were reasons for the slide in GDP.
”Yes, there is a drop of a percentage point in GDP growth, and one percentage point drop in GDP means 3 million jobs are threatened. But why is there so much negativity? What has impacted morale in this country, especially of the younger generation,” he queried.
During 2012-13, exports declined by 1.76 per cent to $300.6 billion, pushing up the trade deficit to $190.91 billion. Stating that steps had been taken to bring down transaction costs for exporters, Sharma said the growth story was intact even for the export sector. “Our exports were $167 billion four years ago. Though we do not know what shape the economy will be in the immediate future, every economy on the global stage is suffering,” he said.
Stating that the aftershocks would continue to be felt in India, China, Brazil, South Africa and Indonesia for some more time, the Minister said the recovery in the US continued to be weak, which “has been a tough task for our exporting community. Though the World Trade Organisation has revised the global trade growth projections downwards, and has projected trade growth from 3.7 per cent to 2.5 per cent, which is less than half of the previous 20 years’ average, we should be able to garner 4 per cent.”
He added, “higher growth is not an option but an imperative for India”. Noting that the Government had taken several steps to push exports to earn foreign exchange, Sharma said with $1.2 trillion in investments set to be absorbed by the infrastructure sector over the next five years, a positive turnaround was around the corner.
Speaking about the downward spiral of the rupee, which has lost over 21 per cent so far this fiscal, Sharma said most economies were facing a problem with their currencies and that India was no different though “liquidity and flow of capital is an issue.”
Sharma added that exports had done well in the first four months of this fiscal and that exporters’ forward bookings were also encouraging. Exporters said their next target was to take exports to the $325-billion mark.