Finance minister P Chidambaram on Saturday said that the economy is expected to grow at a higher rate of 5.5% in the current financial year (2012-13) and 6-7% in 2013-14.
The Central Statistics Office (CSO) had on Thursday projected that the Indian economy would grow at 5% in 2012-13.
"While 5% growth rate of CSO is low and is a matter of concern... we believe growth will be closer to 5.5%," said Chidambaram. "I have no doubt in my mind that we will come out of trough and we will climb back to growth rate of between 6-7% next year and then between 7 and 8% in the year after," he said while launching the Rajiv Gandhi Equity Savings Scheme (RGESS).
Chidambaram said India is still the fastest growing economy in the world after China, Philippines and Indonesia. "The measures that we have taken and will take in the coming days will put India on 8% path," he said.
The Indian economy grew by 5.4% in the first half of the current fiscal year.
Chidambaram also said he would modify the RGESS in the forthcoming budget to make it more attractive for first-time investors. RGESS, which was announced in the budget for 2012-13, seeks to provide tax benefits to first-time investors in stock market. Under the scheme, an individual with an annual income of less than Rs. 10 lakh would get tax incentives for investing up to Rs. 50,000 in the stock market.
He said there is a need to demystify the functioning of stock market and deal with insider trading issues to inject confidence in retail investors. "It is important that we have to demystify the operations of the stock market. We have to make sure that there are no malpractices like insider trading. Only then the retail investors will come to stock market in very large number," he said.