GDP to be 7 to 8% in 2008-09 -- India’s path to Recovery Faster

KAMAL NATH ADDRESS BREAKFAST SESSION AT WEF 
 

Shri Kamal Nath, Union Minister of Commerce & Industry, has stated that India’s GDP would be in the range of 7 to 8% in 2008-09 and added that GDP growth in real terms in the first half of the fiscal year has been at 7.8%, which is fairly robust. Speaking at the Breakfast Session of Boston Consulting Group (BCG) on “Defying the downturn: How Rapidly Developing Economies are Dealing with the Global Slowdown” at World Economic Forum in Davos today, the Minister said that India’s path to recovery will be faster than for the rest of the world. “For example, after industrial downturn in October 2008, the November 2008 figure was positive at 2.4%. The financial situation has eased somewhat and liquidity is accessible in the domestic markets. I would like to point out here that India is still a low-cost high quality competitive manufacturing environment, and with falling shipping rates, it may be more cost effective to set up production facilities in India”, he added. 

“FDI inflow has maintained its pace – with inflow of $ 19.7 billion during the period April – November 2008. Even during the financial crisis was playing out, an inflow of more than USD 1 billion took place in November 2008”, Shri Kamal Nath said. 

During the interaction, Shri Kamal Nath pointed out that India has seen rapid economic growth averaging 8.8% for the past five years; savings and investments as a proportion of GDP have gone up to 36 and 38% respectively; share of services in the economy has increased to around 60%; trade as a percentage of GDP is in excess of 40%, reflecting India’s increased integration with the world and added that India that has gradually integrated with the global economy has not escaped unscathed from the global economic turmoil. “We have a dynamic young population with a large and growing middle class consumers of 300-400 million. Agricultural growth has been robust, maintaining the incomes of 65% of the workforce that is dependent on the sector for livelihood”, the Minister said. 

Addressing the gathering, Shri Kamal Nath underlined the measures taken by the Indian government to mitigate the effects of global economic crisis: “Interest rates have been reduced and cash reserve ratios have been lowered. The repo rate was reduced from 9% to 6.5%, while CRR came down from 9% to 5.5%. Term repo facility for an amount of $12 billion was instituted to ease liquidity stress faced by mutual funds and non banking financial companies. Provisioning requirements for reduced agricultural and SME loans. Excise rates have been slashed across the board. External borrowing limits have been raised and FII limits for corporate bonds have doubled. Tax-free infrastructure bonds have been announced to increase funds available for the sector. Fiscal measures worth $ 5 billion have been announced”