India's domestic demand will help sustain economic growth in the midst of the global downturn, which has not hit the country as much as it has impacted other economies, Commerce and Industry Minister Kamal Nath has said.
"India's growth story is based on domestic demand. It is not based on the export market entirely...We can continue to keep our domestic demand-driven growth," Nath said in an interview to BBC's Hard Talk.
India's exports worth around $200 billion contribute about 20 per cent to its domestic production.
The economy, which grew by over 9 per cent in the last three financial years in a row, has shown signs of weakness in the current fiscal. The Reserve Bank of India has lowered the growth projection to 7 per cent for 2008-09 in the wake of slowdown in the world economy.
"We cannot insulate or isolate ourselves from it (global downturn) but we can continue to keep our domestic demand," he said.
He said the Central government has announced $4 billion for infrastructure projects, which would take off in the next couple of months.
"That is creating domestic demand...And that is what is going to sustain (us) through. We are not going to get hit as (badly) as other countries," Nath said.
Asked whether the two stimulus packages announced by the government are adequate to stem the impact of the meltdown, he said different industry segments are showing signs of picking up.
"I had meetings with industry. They said in the last 15 days they have seen a pick-up...They are seeing things brighten up...Of course they want more," he added.
Nath said government expenditure is bound to increase, leaving a wide fiscal gap. "Our fiscal deficit is going to increase but I think it will be manageable," he said.
Asked about the anti-outsourcing feelings in the US, Nath said, "The heart of globalisation lies in global competitiveness." He expected the US manufacturing sector to realise the virtues of outsourcing.
"Today if GE is outsourcing to India, it is because India has those skills, it has the technology to serve and they can do it in a competitive manner. That is how GE can produce a competitive product," he said.
Nath expressed hopes that businesses would "prevail upon the US administration to look at how competitive it (outsourcing) can be in a global market".