Despite potential headwinds, including the impact of the erratic monsoon on farm output and coal shortages tempering electricity generation, Finance Minister Arun Jaitley on Saturday predicted faster growth in the coming months. A day after the government released its strongest economic growth numbers in over two years, the finance minister said that rekindling the investment cycle remained the top priority for the government and that the steps taken by it should start yielding result in the coming months.
"With the long-term impact of all the initiatives we have taken, I am sure, the impact in the coming quarters will be much larger," Jaitley said. Pointing to a surge in manufacturing orders, a revival in the capital goods industry and renewed international investor interest, Jaitley said he expected GDP growth higher than the 5.7 per cent recorded in the quarter ended June 2014.
“In the first quarter, a 5.7 per cent growth rate is encouraging. With the long-term impact of all the new initiatives setting in, I am sure the impact in the coming quarters will be much larger,” Jaitley said at a press conference here.
As opposed when the new government had taken charge, the finance minister said that there has been a sharp change in the attitude of the foreign investors towards India. “When we came into office, our priority was to contain inflation, restart the growth agenda and keep fiscal deficit at acceptable limit... The economy was facing significant challenges while decision-making had slowed down. We were ceasing to be on the investors agenda while the mood was significantly low. It is in this backdrop that we took over. (However) election result itself was a mood changer,” he said, adding that the government is clear about the direction in which it wants to move.
The government is working on expanding economic activity, hastening decision making, easing the process of doing business in country and opening up investment limits in significant sectors, he said. The government has already liberalised the FDI regime for the defence, railway infrastructure and the construction sector while the work is on in the insurance sector.
“There was a strong prime ministerial backing for all the steps we took. Both Prime Minister and the PMO were in support of most of the steps,” Jaitley said, reaffirming that the “challenge” of the fiscal deficit target of 4.1 per cent, set by the UPA government in the interim Budget, will be