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Asserting that the fundamentals of the economy are strong, PM Manmohan Singh has said GDP will improve in the second half of fiscal 2013-14 and that the government is committed to get back to a sustainable growth rate of 8-9%. Addressing investors in New York, Singh said the government will contain the fiscal deficit at 4.8% of GDP and work towards achieving the medium-term objective of reducing the current account deficit to 2.5% of GDP.
“The results of our efforts will be visible in the second half of the year. We expect stronger growth in 2013-14 than in 2012-13. The second half of the year should see a distinct turnaround, partly because of the good monsoon and partly because of the steps we have taken,” he said.
The economy grew at a four-year low of 4.4% in the April-June quarter. In 2012-13, it clocked a decade low level of growth at 5%. “It is a fact that our growth rate has slow-ed down. We grew at an average of 8% for a decade. Last year, the rate dipped to 5%. To some extent, this reflects the slowdown in the global economy and in all emerging markets,” Singh said.
The government, he said, is committed to getting India back to a sustainable growth path of 8-9%. “The fundame-ntals of the economy remain strong... Our forex reserves stand at over $270 billion and are more than sufficient to meet India's external financing requirements,” he said.
In order to promote growth, India has taken a host of initiatives, including formation of the cabinet committee on investment to expedite approvals for large infrastructure projects.
It relaxed FDI norms in various sectors, including retail, telecom and aviation.
“Restrictions in the banking sector have been eased. The policy regarding FDI in defence has been clarified to indicate that FDI beyond 26% can also be considered on merit,” he said. “We’ll make every effort to maintain a macro-economic framework friendly to foreign capital inflows,” he said.