Greenshoots of recovery are visible in the economy, said Arvind Mayaram, secretary, department of economic affairs, in an exclusive interview with Hindustan Times. He spoke about how the government plans to boost growth in the second half of 2013-14. Excerpts:
How confident are you of meeting the government’s disinvestment target?
The disinvestments process could not be kicked off earlier due to volatility in the market. I am absolutely confident of meeting the target. The department of disinvestments is working on it. The process will start from October and we will achieve the total target of Rs 54,000 crore, which includes Rs 14,000 crore that is expected to come in through sale of the government’s residual shares in public sector units that have been sold.
Rating agencies have been cutting India’s growth projections for 2013-14. How confident are you of a growth picking up in the remainder of the year?
The first quarter of the current financial year was driven by the spillover effects of the last financial year when growth was sluggish. The question is whether it will continue in the future. Without being a soothsayer I would like to draw your attention to the fact that the Cabinet Committee on Investment has cleared projects worth $30 billion. This will begin to show up in the growth figures in the third quarter. Then, public sector spending has also been higher in the first quarter.
Then, FDI in the first quarter of this year was substantially higher than in the corresponding period last year. We expect the FDI figure for the full year to be $30-35 billion, compared to about $22 billion last year. And finally, the IIP figure for July shows a 15.6% growth in capital goods (a proxy for industrial activity).
All these are concrete figures, not assumptions. Taken together, I would say that the early greenshoots of recovery are visible.
Business sentiment and confidence are at a low. Investors are not keen to invest in India. How do you plan to restore confidence?
It is incorrect to say that. In fact, FDI flows are picking up. For the first four months of the current financial year, FDI inflows were up 20%. I am not talking about FIIs here, this is FDI, which is long term in nature. FDI flows in 2013-14, is expected to easily touch $30 billion or even more.
What is the government doing to address the problem of inflation?
There is urgency as far as food inflation is concerned. We have large stocks of foodgrains. Besides, this year we have had a very good monsoon, the result of which we should start seeing from the third quarter.
Food prices are expected to cool once the results start showing. Food inflation, if you analyse, is also primarily due to one item – onions. Prices of onions have typically gone up during the monsoon period. However, we expect prices of food items to cool soon.
The US Fed has postponed the tapering of its quantitative easing programme. There is a general view that we need to utilise this period to put our house in order. Do you have a plan for this?
We need to continue to work towards structural reforms. We must continue our focus on growth, exports and greater FDI flows, among other things. We must strengthen ourselves. We cannot be complacent but at the same time I would say there is no need for any kind of panic.
What is the status of the BRICS bank?
It is on track. There is a lot of movement. The board principles of the bank have been chalked. It will primarily be a lending institution for large infrastructure projects in member countries. Initially, it will have only the BRICS as members, but later, we may open the membership to other countries as well.