India’s GDP Poised for 12% Growth

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Apr. 9 – At an address during the Indian Institute of Management’s alumni event in Singapore over the weekend, Raghuram Rajan, the Chief Economic Adviser to the Indian Finance Ministry, said that India’s gross domestic product (GDP) growth rates may reach 12 percent annually in the coming years.

Rajan noted that such growth should be achieved by creating an additional number of sustainable jobs rather than through giving handouts to the poor.

“If all goes well, India should recover from its growth slowdown and not necessarily limit itself to growth of 8 percent… India could grow at the Chinese rate of growth of 11-12 percent,” he said.

Furthermore, for the first time ever, India’s 2013 Economic Survey contained a chapter that focused on job creation, reflecting the need to create greater employment opportunities for India’s youth. India only created one million jobs between 2005-2010.

Rajan also added that facilitating the completion and launch of new infrastructure projects is key for growth revival in the short term, and that industrial corridors (such as the one between Delhi and Mumbai, and those planned between Mumbai and Bangalore and Bangalore and Chennai) will provide a boost to industrial activity and may aid in a revival of the manufacturing industry. He further noted that reducing consumption levels and increasing savings, along with a pick-up in investments, will bolster economic growth.

Rajan expressed hope that the cabinet committee on investments, which had cleared projects totaling Rs.70,000 crore (US$12.84 billion) during its first three meetings this year, will hasten the pace of its approvals. The government is looking at ways to speed up road and power projects, ensure coal supply to power plants and addressing growing regulatory problems.

India’s GDP is expected to have grown at a decade-low of 5 percent during the past fiscal year (which ended on March 31) dampened by a slowdown in the manufacturing, services and agriculture sectors. For comparison, India had registered average yearly growth rates of 8 percent during the previous five years.

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