India's growth curve to accelerate further: Jaitley

Tokyo: Highlighting India as the world's fastest growing major economy despite an unsupportive global environment, Finance Minister Arun Jaitley on Wednesday said good monsoon, GST passage and higher spending will accelerate the upward curve in the coming years. "When globally the going is good most countries do well. It is when the world is slowing down and world environment is not only unsupportive but at times obstructive, for an economy to grow is most challenging," he said. Pro-growth policies have helped GDP grow at faster-than- expected 7.9 per cent in the January-March quarter, and 7.6 per cent for the entire 2015-16 fiscal, Jaitley said, asserting that these are not "stray figures" and an analysis of the pattern shows inherent strength in the Indian economy. "To grow at this rate in the midst of an unsupportive global environment is itself significant," Jaitley said addressing a conference here before heading for Osaka. Stating that global unpredictability impacts India, he said the shrinkage of global trade as well as fluctuations in currencies has adversely effected the economy. Besides, drought for two consecutive years in parts of the country also impacted the growth prospects. "Notwithstanding an unsupportive global environment, I firmly do believe that India has the potential over the next year or two to improve upon this growth rates and continue to retain its position as the world's fastest growing economy," he said. Going forward, "reform process is going to continue. Hopefully, Goods and Services Tax (GST) bill is passed (in ensuing monsoon session of Parliament), which has the potential to add to GDP growth. Also, our infrastructure and rural spending will add to that," he said commenting on the latest GDP numbers. A good monsoon this year, as forecast, "would mean an increase in agriculture production, more purchasing power and rural demand," he said. "Better monsoon, when rural demand increases, will cumulatively push up growth." The GDP expansion in January-March period bettered 7.2 per cent of December quarter and helped extend the lead over China, which grew 6.7 per cent in the March quarter -- slowest in the world's second largest economy in 7 years. "In the midst of global slow down our per capita income increased by 7.4 per cent. We met our target of fiscal deficit. What is more significant, revenue deficit has been down to 2.5 per cent," Jaitley said. On external factors, he said oil and commodity prices effect the Indian economy. "India being a net buyer has benefited from the regime in last over a year. And if the prices remain within the current range we have the ability to absorb although if there is any undue increase in prices its impact on both inflation and savings would be noticeable," he said. He said the GDP figures released on Tuesday have shown that there was an increased consumer spending which has its impact on the private sector as increased demand will enable them to fill up their capacities. "Starting this week the fresh monsoon season in India begins and by all indications this is going to be a good season for monsoons. In last 100 years, India has never had three years of bad monsoons in a row. Met dept projections indicate it will be a bumper monsoon," he said. Better monsoon will push rural demand, leading to higher growth. "Not withstanding weakened service export, to maintain 7.6 per cent in a year of slowdown is significant and I am sure if monsoons are as good as have been predicted along with all these factors, India has a potential to improve upon this year's figure," he said. Also aiding was the growth in output of eight core sectors growing 8.5 per cent in April on the back of pick up in output of refinery products, fertilisers, steel, cement and electricity. On the growth clocked in 2015-16, Jaitley -- who is on a six-day investor wooing tour of Japan -- said, there was improvement in the agriculture as well as the services sector. "More importantly, there is a consumer demand and there is increased consumer spending," he added. Earlier, speaking at a meeting organised by Japan-India Business Cooperation Committee, he said investors looking for higher returns should park funds in India's infrastructure and manufacturing sectors. "As growth would return to the world, consumer spending would pick up, hopefully the monsoons would be better, this trend which has been set in India itself could be improved upon. That we are on an upward curve seems evident," he said. Jaitley said the Indian economy clocked 7 per cent growth rate in every quarter of the last fiscal, ended March 31, despite an unsupportive global economy and two consecutive years of weak monsoon. This has been possible because of increased public spending, performance of India's private sector and confidence which foreign investors reposed in India by investing the highest ever funds even in the slowdown years, he said. "I'm sure Japanese investors and funds and other agencies who are looking forward for gainfully employing their resources would certainly look at the India story which offers attractive destination for investment," he added. He said that besides infrastructure, the manufacturing sector is the top most priority and provides very large opportunity to international investors to participate in India growth story. India offers flexibility to investors, Jaitley said, adding that impetus on 'Make in India', increased infrastructure and rural spending would help push growth. "The returns that India offer are extremely attractive compared to other destinations, the magnitude and volume of investment required is much larger and it's for a reasonable period of time that this investment is going to continue because infrastructure deficit has to be met," Jaitley added. The finance minister said the Indian government is now continuing on the reform trajectory which was left undone in 1991 and people have become aspirational and are supporting reforms. "India today is passing through a very critical phase in its history. In 1991 we had a very important reform programme which was initiated. It proved to be very successful. We continued on that roadmap and I think what was left out is now being implemented. There is never a last day in the calendar of reforms, situations are dynamic, they keep changing, they keep progressing. Newer challenges come up and we expect newer responses from the government," he said. He said Japanese companies have become household names in India starting from automobiles to household appliances to also the Delhi Metro. "Our industrial corridors are being built with Japanese assistance and I am sure the ambitious Bullet Train project between Mumbai and Ahmedabad once implemented will be absolutely a showpiece in India's economic development," he said, adding currently there are over 50 projects of different magnitudes being implemented in India today. "I don't see a period which is very far off where almost every major city in India that aspires to have a local transport system based on Delhi Metro...to become reality," Jaitley added.