India, after remaining in high growth trajectory continuously for the last four years is now projected to grow between 7-7.5% during the current financial years. This was stated by Shri Ashok Chawla, Secretary, Department of Economic Affairs in his inaugural address at the Third India China Financial Dialogue, here today. He however added that the pace of growth next year is contingent upon how long the global recession lasts and how quickly capital flows return to normal. With the presence of strong domestic demand stimulus, he said that India expected to maintain a strong pace of economic growth despite continuation of global recession.
The Secretary said that India has taken a number of steps to inject liquidity into the financial systems, recapitalised banks and other systemically important institutions to tide over the crisis. With overall investment climate becoming gloomy, private investment in developing countries would show a declining trend. Expanding investment in infrastructure by both the private and public sector could act as an effective countercyclical device to stimulate demand and to create conditions conducive for faster growth.
Noting that the India China Bilateral Investment Promotion and Protection Agreement has been a landmark event in bilateral cooperation, Shri Chawla identified banking sectors and capital markets as areas where the expert teams of both the countries to jointly work and evolve a time-bound strategy for closer engagement. Under the G-20 initiative, both the countries are represented in the four working groups to deal with issues such as (1) Enhancing sound regulation and strengthening transparency, (2) International cooperation and promoting integrity in financial markets (3) Reforming the IMF and (4) Reforming the World Bank and Multilateral Development Banks. He observed that both India and China have to work together to ensure that reform initiatives usher in tangible results for developing nations.
Concluding his remarks, Shri Ashok Chawla emphasized financial sector reform process as a key to improve productivity, efficiency, profitability and coverage of the system. “The operational rigidities in credit delivery system are required to be addressed to ensure allocation efficiency and achievements of social objectives”, he added.