Prime Minister Manmohan Singh Saturday took international rating agencies to task for cutting India’s growth forecast and asserted that the fundamentals of the economy are strong.
“The fundamentals of the economy are strong. We have the highest savings and investments rate in the world,” said the prime minister, adding that unwarranted conclusions should not be drawn on the economy’s growth prospects.
“We shouldn’t draw unwarranted conclusions. This year we will see better than 6.5 percent (GDP) growth of last year,” Singh said on the sidelines of the swearing-in ceremony of Vice President Hamid Ansari at Rashtrapati Bhawan.
The prime minister was commenting on the global rating agencies which recently cut India’s growth forecast for 2012-13, citing lack of policy reforms and slowdown in manufacturing and exports and a below average monsoon.
Moody’s said in a latest note Aug 8 that the slowdown has been sharper and more broad-based than anticipated and is now deeply entrenched across all sectors of the economy and cut the growth rate to 5.5 percent.
India’s economic growth slumped to nine-year low of 5.3 percent in the quarter ended March. For 2011-12, India’s GDP expanded by 6.5 percent, substantially down from 8.4 percent growth registered in the previous year.
The government is aiming at around 7 percent growth, but the Reserve Bank of India last week lowered the growth outlook to 6.5 percent for 2012-13.
The newly appointed Finance Minister P. Chidambaram has said the government would necessary steps and remove hurdles in critical sectors like power and transport that are impeding growth.