Indian economy is expected to expand at 8.5-9 percent over 10-15 year time frame once the structural issues hampering growth are addressed by the government, Finance Secretary Rajiv Mehrishi said on Wednesday.
“India has a growth potential close to 8.5 percent to 9 percent over the next 10-15 years… The short term growth may be lower on account of structural issues which we are tackling,” said Mehrishi.
Strong economic growth, he added, is necessary for solving many socio-economic problems facing the country.
“India’s growth is expected to be at least 8 percent in the current fiscal on account of initiatives taken by the government to boost investment and growth,” Mehrishi said.
The Economic Survey had projected a growth of 8.1 to 8.5 percent in the current financial year.
“Multilateral institutions also share our growth optimism. IMF has projected a growth of 7.5 percent for 2015-16. Other organisations also project the growth to be in the vicinity of 7.5 percent,” he added.
As per the latest World Economic Outlook of the International Monetary Fund (IMF), India will surpass China in terms of growth to become the fastest growing large economy in the world.
IMF expects India to grow at 7.5 percent in both 2015 and 2016, while China’s growth rate has been projected at 6.8 percent and 6.3 percent respectively.
“Though the recovery in advanced economies is slow, the external environment for India is benign,” Mehrishi said.
The government has taken various initiatives to deal with the structural issues like going in for auction of key infrastructure inputs such as coal and spectrum, setting up of the MUDRA Bank and streamlining the norms for foreign direct investment (FDI).
On India Meteorological Department (IMD) projection of below normal monsoon, the Finance Secretary said: “A weak monsoon generally leads to low rural economic growth and spike in prices of food commodities. However, this year food prices are expected to remain stable.”
He added: “As done in last year, government could offload stocks from its godowns especially wheat and rice to cool down prices of food grains, discouraging exports of those food commodities like potato and onion, which has the potential of highest price volatility and importing those items, which are short in supply like pulses and edible.”
The government, he further said, was also taking a host of steps to address rural distress “through programmes rather that price distorting measures”.
The initiatives include viable crop insurance programmes for benefit of farmers and scaling up MNREGA in distress villages and rural areas, he added.