Finance Minister Pranab Mukherjee on Sunday exuded confidence that the economy would soon revert to 9 per cent growth, witnessed in the pre-crisis period, even as
industrial growth plunged to a 16 month-low of 4.4 per cent in September.
The Finance Minister said the challenge now is to find the means to cross the double-digit growth barrier in the coming year or two.
"In the short term, it is reasonable to expect that the economy will go back to the robust growth path of around 9 per cent average that it was on before the global crisis slowed (it) down in 2008," Mukherjee said at the three-day India Economic Summit 2010, which opened in th the national capital on Sunday.
Although manufacturing growth has slowed down in the past couple of months, the Finance Minister said the sector has been performing strongly.
"Finally, the manufacturing sector has been showing buoyancy reminiscent of the pre-slowdown year, though some concerns on its growth momentum have emerged in the last month or two," Mukherjee said.
For the second consecutive month this financial year, industry performed poorly in September. Its growth plummeted to 4.4 per cent in September, after 6.92 per cent in the previous month.
Manufacturing sector, comprising almost 80 per cent of Index of Industrial Production (IIP), grew at slower rate of 4.5 per cent in September, against 8.3 per cent a year ago.
Mukherjee based his confidence in the growth story on high savings, investment rates and pick up in corporate earnings and profit margins.
"The savings and investment rates have reached levels that even 10 years ago would have been dismissed as pipe dream for India. Since these indicators are some of the strongest co-relates of growth and do not fluctuate wildly, they speak well for India's medium growth prospects," he said.
Mukherjee added: "Second, the arrival of India's corporation in the global market place, the sophisticated corporate culture that many of these companies exhibit, lends to an optimistic prognosis for the economy in the medium to long run."
The Finance Minister said the government's objective is to harness high growth for the development process by making economic expansion inclusive.
"We are acutely conscious that if our efforts (on inclusive growth) have to bear fruit, we have to tackle issues of governance and service delivery," Mukherjee said.
Indian economy grew at an average rate of 9 per cent per annum during 2004-05 to 2007-08. After the global financial crisis, it slowed down to an average 7 per cent during 2008-09 and 2009-10.
In the first quarter of this financial year, economic growth rebound to 8.8 per cent. "The recovery is broad based with growth in all sectors," the Finance Minister said.
Talking about reforms, Mukherjee said the government has decided to set up financial stability and development council, a financial sector legislative reforms commission, to rewrite financial sector loss.
He said efforts are under way to introduce new indirect tax (GST), while the direct taxes code has been unveiled to replace the archaic income tax act.
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