Commerce and Industry Minister Kamal Nath on Thursday expressed hope that India's gross domestic product (GDP) will grow at 7-8 per cent in 2008-09 and said the country's recovery from the financial crisis will be "faster than the rest of the world".
Speaking at the breakfast session of Boston Consulting Group (BCG) in World Economic Forum in Davos, Kamal Nath said the GDP growth in real terms in the first half this fiscal has been 7.8 per cent, which is fairly "robust", an official statement released in New Delhi said.
"India's path to recovery will be faster than that of the rest of the world," he added.
"For example, after industrial downturn in October 2008, the November figure was positive at 2.4 per cent. The financial situation has eased somewhat and liquidity is accessible in the domestic markets," Kamal Nath said.
"I would like to point out here that India is still a low-cost high quality competitive manufacturing environment, and with falling shipping rates, it may be more cost-effective to set up production facilities in India," the minister added.
The foreign investment too has maintained its pace with an inflow of $19.7 billion during April-November 2008.
"Even when the financial crisis was playing out, an inflow of more than $1 billion took place in November," Kamal Nath said.
"We have a dynamic young population with a large and growing middle class consumers of 300-400 million. Agricultural growth has been robust, maintaining the incomes of 65 per cent of the workforce that is dependent on the sector for livelihood," the optimistic minister said.
He underlined the measures taken by the government to mitigate the effects of global economic crisis. "Interest rates have been reduced and cash reserve ratio has been lowered. The repo rate was reduced from 9 per cent to 6.5 per cent, while cash reserve ratio (CRR) came down from 9 per cent to 5.5 per cent."
Also, term repo facility for an amount of $12 billion was instituted to ease liquidity stress faced by mutual funds and non-banking financial companies.
Kamal Nath said excise rates have been slashed across the board and external borrowing limits have been raised and foreign institutional investors (FII) limits for corporate bonds doubled.
"Tax-free infrastructure bonds have been announced to increase funds available for the sector. Fiscal measures worth $5 billion have been announced," he added.