There has been enormous hunger for growth for past couple of years. The endemic problems in the Indian economy have contained the growth prospects for quite some time now. However, it seems tides have turned. And turned for the better! Indian economy seems ushering to be ushering into a new growth era.
Clearly, optimism is in the air! Our honorable finance secretary Arvind Mayaram witnesses green shoots of economic recovery . Gross domestic product (GDP) at 5.8% for FY15 - that's what he anticipates. He prefers and advises to shun the myopic views. And foresees Indian economic woes receding sooner than later! Mayaram's expectations stem from the early signs of revival in the industrial sector. He makes no bones about the fact that the recent government measures would help step-up the economic growth. India's economic growth has languished below 5% in each of the last two financial years.
This coupled with expeditious execution would pull the economy out of woods. Moreover, softening inflation would also deter central bank from holding interest rates high, believes Mr Mayaram!
Remember Raghuram Rajan's statements in the recent credit policy? "RBI will not hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates." Now that's the icing on the cake! For interest rate cuts would boost the credit growth and in turn would set the investment cycle rolling.
Our finance secretary is equally confident of the India's promising contribution to the global economy. His GDP estimate of 5.8% quite clearly surpasses the central bank projection of 5.5% growth. The uptick in industrial output indicative of the corporate order book picking up corroborates Mayaram's buoyant views. Another positive development is the growth in the passenger vehicle sales for third consecutive month. It is a prime indicator of the health of the economy. Furthermore, the lowering of the subsidy burden in concurrence with the welfare programs over next two to three years would decisively spur the much required growth. He also believes that the government is confident of containing the current account deficit to below 2.5% of GDP in FY15.
With these concrete developments in place, the finance secretary expects India to establish its credibility globally. Not just the officials, but even economists widely believe that economy will expand over 5% in the April-June quarter of this fiscal itself. These evaluations definitely indicate a sharp turnaround for Indian economy by the end of this fiscal. In short, the green shoots are visible. Also, the intent of the newly formed reformist government is quite vivid. Effective measures are being taken to eradicate supply constraints and propel growth. However, for any stable positive trend, the country will need to witness a lot of action on the reforms and policy front. And there is further the issue of corruption and crony capitalism to deal with. We hope this optimism is transformed into pragmatism and we get to see some on the ground level changes.