New Delhi, Oct 1 (PTI): The finance ministry on Tuesday said the economy will grow by over five per cent in the current fiscal on back of high farm productivity and investments, and promised more steps to boost growth.
”It (GDP) will be more than five per cent, it cannot be less than five per cent,” economic affairs secretary Arvind Mayaram said when asked about forecast by private analysts that growth could be lower than five per cent in 2013-14.
Mayaram exuded confidence that growth would improve in second quarter of current fiscal mainly on account of increase in the sown area, acceleration in the pace of plan expenditure and impact of projects cleared.
”As we are seeing growth clawing back, I am quite sure that the environment will be conducive for further incentivising of growth and we will see whatever steps have to be taken,” Mayaram said.
He said there has been signs of improvement in the manufacturing, electricity sector and capital goods sector in July and the eight core industries too showed a growth pick up of 3.7 per cent in August.
Mayaram said the growth of the consumer durables sector, which was negative in July, would pick up in the remaining quarters on account of festival demands.
The economy grew at a four year low of 4.4 per cent in the April-June quarter of current year. In 2012-13 fiscal the growth was at a decade low level of 5 per cent.
”The Q2 GDP growth should be better than first quarter... We need to incentivise growth... As far as the interest rate is concerned, it is completely the domain of RBI and Governor will take a call on that,” Mayaram said.
The Reserve Bank of India is scheduled to announce its second quarter policy review on October 29.
The current account deficit (CAD), Mayaram said, was expected to be less than $ 70 billion or 3.7 per cent of GDP for the full fiscal.
Mayaram said the “elevated level” of CAD at 4.9 per cent in June quarter is mainly due to gold imports, which would be restricted below 800 tonnes this year. The imports were 845 tonnes last year.
”We would certainly hope CAD would be less than $ 70 billion. The CAD will be fully and safely financed without any recourse to dipping into reserves,” he said.
On the impact of US shutdown, Mayaram said “We hope the impasse will be resolved so that there is no spillover to the global economy. As of today, I don't see any major impact on the Indian economy on that account”.
On Tuesday, the US government began the shutdown as Republicans and Democrats failed to strike a deal on spending and budget mainly due to their differences over 'Obamacare', the flagship healthcare programme of President Barack Obama.
On rupee, Mayaram said though it has stabilised, there is a need to remain vigilant and encourage capital flows. He said the FDI inflows this fiscal could exceed $ 24 billion.
FDI inflow in April-June quarter was at $10.5 billion, against $ 8.2 billion in the corresponding period last year.
There was no immediate need for curb on imports, Mayaram said, adding “we will not be shy of taking them if and when warranted”.
Referring to the fiscal situation, Mayaram expressed confidence that revenue target would be met .
The government aims to bring down fiscal deficit to 4.8 per cent of GDP in 2013-14 from 4.9 per cent last year.
The government, Mayaram said, has announced austerity measures to keep the expenditure in check. It last month had announced a 10 per cent cut in non-plan expenditures and put curbs on wasteful expenditures like holding meetings in 5-star hotels, air travel, among others.
In order to boost sagging growth, the government had in January constituted the Cabinet Committee on Investment (CCI) under Prime Minister Manmohan Singh. The CCI has so far cleared 209 projects worth Rs 3.84 lakh crore.