In a sign that the government was scaling down its GDP growth outlook, Prime Minister Manmohan Singh said in Jaipur on Sunday that the economy was expected to close the current fiscal year with 7% growth — below the 7.5% forecast in the government's mid-year review of the economy last month. The economy grew at 8.5% in 2010-11.
However, Singh — evidently encouraged by signs of recovery in the US economy and an easing of inflation at home — said strong economic fundamentals will help India hit the high growth path again.
Inaugurating the 10th Pravasi Bharatiya Divas, the annual gathering of the Indian diaspora, he said, "Despite an adverse international environment, the Indian economy is expected to grow by about 7% in this fiscal year. However, we hope to bring back the rhythm of our growth processes to sustain an annual growth rate of 9-10%."
Singh said efforts to tackle inflation were producing results.
India’s gross domestic product growth in the July-September quarter at 6.9% was the weakest in more than two years.It resulted in the government lowering its forecast for the year ending March 2012 to 7.5 per cent from the 9 per cent envisaged in the last budget.
The government's benchmark inflation has stayed above 9% for a year despite 13 rate increases by the Reserve Bank of India since March 2010. But food inflation turned negative at 3.36% in mid-December, spurring hopes that prices were being reined in to enable interest rate cuts. The three-day congregation of non-resident Indians concludes on Monday. About 900 delegates from 60 countries are attending the event.
Lauding the achievements and contribution of the diaspora to India and their adopted homelands, Singh announced a new pension and life insurance fund to help overseas Indian workers. "The scheme will encourage, enable and assist overseas workers to voluntarily save for their return and resettlement and old age. It will also provide a low-cost life insurance cover against natural death," he said.
Kamala Persad Bissessar, PM of Trinidad and Tobago, said India, the land of her origin, was like a grandmother.