Despite being hit by the global slowdown, India's GDP growth rate can 'bounce back' to nine per cent in the next three years due to robust savings and investment rates in country's economy, Prime Minister Manmohan Singh has said.
"Before the global slow down our economy in the previous four years was increasing at an annual rate of nine per cent per annum. Last year, because of the global slowdown the growth rate declined to about 6.7 per cent," Singh said.
Appearing optimistic about the state of the Indian economy which has been affected by the global slowdown, the prime minister said, "This year we expect the growth rate to be 6.5 to seven per cent."
Singh exuded confidence that in two to three years' time, the Indian economy can bounce back to the growth rate of about nine per cent per annum.
"I say this for many reasons. Our savings rate is about 35 per cent of our GDP. Our investment rate is about 37 per cent of GDP," Singh told a Russian media in an interview ahead of his three day official visit in Moscow.
With these savings rate and investment rates, we can sustain a growth rate of nine per cent without difficulty.
"With an investment of 37 per cent and the capital output ratio of four is to one we can easily attain the targeted growth rate of nine per cent per annum, which I expect we will do in the next two to three years," the prime minister said.
Outlining cooperation between both the countries in pharmaceutical and medicine sector, Singh said, "I sincerely hope that Russia and India can explore avenues of cooperation whereby Indian pharmaceutical concerns can help to expand the quality health-care in particular in the supply of generic drugs to the Russian public at affordable costs and prices."
World over, in generic drugs Indian companies have acquired a name for themselves, the prime minister added.
Asked difficulty in getting Indian visas for Russian citizens, Singh said,"If visas are a problem, I think the visa regime needs to be liberalised. We will explore all possibilities to expand cooperation on people-to-people basis.
"The prime minister said India is in favour of developing closest possible business and people- to-people contact between our two countries. Whatever obstacles exist in the development of these people-to-people contacts, they should be discussed and effective remedies should be found."
A big challenge, says Pranab: A surprising 7.9 per cent growth in the second quarter notwithstanding, finance minister Pranab Mukherjee said on Friday returning to nine per cent trajectory remains a big challenge.
"We expect strong growth in the second half of the current year. . .Our road ahead is full of challenges. The chief amongst them is to take the economy back to 9 per cent per annum growth path," he said speaking at a Federation of Indian Chambers of Commerce and Industry in New Delhi.
He further said the growth rate in the first half of the current fiscal signifies resilience of the Indian economy, adding that he is confident of the strength of the stimulus measures taken by the government.
"The GDP number in the first half of the current year vindicates our expectations and provide ample proof of the resilience of the economy," he said. Impacted by global slowdown, India's growth fell to 6.7 per cent in the last fiscal compared to an average nine per cent in the three preceding years.
However, belying predictions of economists and analysts, the Indian economy grew by 7.9 per cent in the second quarter of this fiscal, up from was 6.1 per cent in the previous quarter, essentially due to a good showing by the industry and the services sector.
"The achievement is particularly significant considering ..unfavourable monsoon which has dampened the growth of the farm sector," Mukherjee said.