Amid speculation about the future of economic reforms in India, an advisory panel to the country’s prime minister has projected an optimistic picture, saying the economic growth will accelerate to 6.4% in the current fiscal year that began April 1.
The Prime Minister’s Economic Advisory Council, headed by C. Rangarajan, an eminent Indian economist, admitted that the Indian economy grew only 5 per cent in the fiscal year 2012/13, and voiced concern about the current account deficit. The overall picture presented in the report is, however, that of stability and growth.
The current account deficit will likely narrow to 4.7% of GDP in the current fiscal year from an estimated 5.1% last year, he said. The panel expects wholesale inflation to remain around 6% this fiscal year due to increases in administered fuel prices, he added.
The optimistic outlook on the Indian economy is seen as a reflection of the government’s will to push through the second generation economic reforms, including a proposal to hike FDI cap in the insurance sector.
Last week, India’s Finance Minister P. Chidambaram pointedly dispelled notions about Asia’s third largest economy imposing restrictions on investments. In a wide-ranging interaction with the US business community and opinion leaders, he had underlined that there was a huge opportunity waiting for those ready to bet on the India story.
“I think the right way to look at it is we are not restricting. We are opening up in a gradual manner. Where were we in 1991,” Chidambaram had told the famous Charlie Rose Show in an interview.
“What are we today, in 2013? In the space of 22 years we have opened practically 90 per cent of India’s economy,” he stressed. “There are still some areas which are closed or which are restricted. But they will open up. But the areas that are being opened up are so large, all this manufacturing. Steel, power, roads, airports, seaports, all this is open. Therefore, there’s a huge opportunity for investors,” he emphasized.
According to the Ernst & Young’s (E&Y) 2012 India Attractiveness Survey, investors view India as an attractive investment destination. India stands as the fourth most attractive destination for FDI in the survey’s global ranking.
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