Hailing the budget, Prime Minister Manmohan Singh on Thursday said it would reverse the pessimistic mood and lay the road map for investments. He also expressed confidence of returning to 8% growth within three years.
Singh listed fiscal deficit, inflation and current account deficit as three barriers that can affect the realisation of the growth potential of the economy.
"Given the formidable challenges facing our economy, the finance minister has done a commendable job," the Prime Minister said in an interview to Doordarshan soon after the presentation of the budget.
"The finance minister has taken important steps to reverse pessimistic mood with regard to investment climate, with regard to the growth potential and possibilities of our economy," he said.
Singh said India needed to accelerate the tempo of growth to create jobs for its growing labour force to the extent of 10 million persons every year.
"We need, as the 12th five-year-plan has mentioned eloquently, a growth rate of about 8%. This is a growth rate that is consistent with our underlying potential," he said, adding it was a difficult task which couldn’t be achieved in a single year.
He said Chidambaram had laid the road map which had "plenty of food for every ministry to chew there".
Expressing confidence that India could return to 8% growth within three years, the PM said all ministries needed to work in tandem to convert challenges into opportunities.
"It is up to the collective wisdom of my council of ministers to convert these challenges into opportunities to accelerate the tempo of growth, to make it more inclusive, to make it more sustainable," Singh said.
Noting that the economic survey had pegged the growth rate between 6.2% and 6.7%, Singh said "in three years’ time, if we work hard and the world economy also improves, we should get back to 8% rate in two to three years".
He flagged three "barriers" — fiscal deficit, inflation and current account deficit — that can affect the realisation
of the growth potential of the economy and said there was a need for a multi-pronged strategy to tackle these.
"The finance minister has charted a path to bring fiscal deficit under control. And if he succeeds in that course, I think he would have created a better climate for growth, better climate for investment and we would have also created a climate for lower latent levels of inflation that we have had in the last two years," Singh said.
He favoured reduction, in the medium term, in the country's dependence on imports of iron, coal, gold and petroleum products to tackle the problem posed by current account deficit.
On problems faced by projects on account of clearances of various sorts, Singh said: "We have committed ourselves to use the mechanism of cabinet committee on investments to grapple with these tensions and to ensure that these
roadblocks, whether they are in environment clearances or forest clearances, are dealt with."
On the comfortable levels of current account deficit, he said 2.5%to 3% of the GDP was a "safe level".