India has set an ambitious target of making 2012 the year of double digit growth even as it grapples with the twin problems of mounting deficit and rising inflation.
"India is back on a high growth trajectory," Finance Minister Pranab Mukherjee said in a presentation in Washington on Monday to the Institute of International Finance, a global association created by 38 banks of leading industrialised countries in 1983 in response to the international debt crisis of the early 1980s.
Mukherjee is in Washington to lead a high-powered team of policymakers including Commerce Minister Anand Sharma and Planning Commission Deputy Chairman Montek Singh Ahluwalia at the India-US CEOs Forum on Tuesday.
He will also have a separate bilateral meeting with US Treasury Secretary Timothy Geithner on Tuesday.
Noting that India had not remained unaffected by the global financial crisis, Mukherjee said after four consecutive years of 9 per cent plus growth, the Indian economy had slowed down to 6.7 per cent in fiscal 2008-09.
But it had bounced back to 7.4 per cent growth in 2009-10 and was expected to register 8.5 per cent in 2010-11, he said for once agreeing with the International Monetary Fund prediction of 8.8 per cent growth.
As two thirds of Indian exports went to developing countries, the Finance Minister said he had to concentrate on generating domestic demand to put the country back on the growth road after the global recession that hit advanced economies hard.
While India was expected to register a growth of 9 per cent in 2011-12, "My target is to make it a year of double digit growth," he said.
With the world back on the road to recovery thanks to stimulus and other measures agreed to by the group of 20 leading economies, the question was at what point of time should there be a total exit policy, Mukherjee said.
His prescription made to the G-20 finance ministers ahead of this week's Toronto summit was that all countries will not take fiscal consolidation at a time and this should be staggered, the minister said.
India had to start the fiscal consolidation as fiscal deficit had risen from 3 per cent to 6.8 per cent in 2008-09, he said describing inflation as the second major challenge before the country.
Noting that India would require a huge investment of about $600 billion in the next few years in the infrastructure sector, Mukherjee said the inflow of foreign direct investment had not been disturbed despite the financial crisis.
"Confidence in the Indian economy and its potential is well recognised and our private sector is very vibrant and dynamic," he said noting that the younger generation of the business leadership had no baggage of the past. "They have emerged as the global citizens and global players."