India may clock 8% growth even this fiscal if rural demand rises along with factory output: FM Arun Jaitley
Arun Jaitley said that India could achieve 8% growth even this fiscal if rural demand can be raised along with factory output.
"7-7.5% growth is below our potential... 8% growth is plausible even this year," Jaitley said in Kolkata. "We have to maintain our momentum of growth. Those who play games in Parliament need to understand that they are stalling growth," he said in a veiled attack on Congress.
The Narendra Modi government has cleared hurdles for free-er entry of foreign capital in India while the initiatives like Make in India aims at turning the country into a global manufacturing hub to generate jobs and drive growth. But the state of political affairs has slowed down implementation of GST and land reform.
"The world refers India as the bright spot.. But within the country there are legitimate concerns," he said. The country is facing lower rural demand weighed by three years of bad monsoon, while the manufacturing output is yet to pick up fully while the over-stressed private sector is holding back investment.
If the trend related to these sectors can be reversed a bit, the FM said that economy can look forward to higher growth than the projected 7.4-7.5% in FY16.
The finance minister's assertion on growth may assure many, who have turned cautious ever since China started slowing down, impacting the global growth prospects. International Monetary Fund has revised the global growth forecast to 3.4% from 3.6%.
"What happens in China does not affect the supply chain in India and therefore, we are less impacted than other economies," the FM said in the first Suresh Neotia Memorial lecture organised by CII and Suresh Neotia Centre of Excellence for Leadership.
Jaitley said India has been driven on the strengths of increased public spending, increased foreign investment and higher urban demand.
The government has raised spending on infrastructure, rural roads and irrigation and these areas could continue to attract large budgetary support in the coming budget. "Investment in these sectors gives quick return," the FM said.
The FM said the fall in crude has helped the Narendra Modi government increase spending on social infrastructure. which in turn, contributes to growth. But he lamented the state of disruptive politics in India.
"The world's largest democracy cant function unless it has high quality of politics. Evolution of Indian Politics needs to take place," he said, referring to the bane of caste-based politics and the prevalent system of political dynasty.