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New Delhi: Prime
Minister Manmohan Singh Saturday said there was no need for
pessimism over the fundamentally-strong Indian economy, with the
current slowdown just a short-term phenomenon due largely to the
ongoing turmoil in the Western world.
"The current slowdown is a matter of concern. But it should be
seen as a short term phenomenon, reflecting highly unsettled
conditions in the global economy. Growth rates are being revised
downwards in all countries," the prime minister said.
"We must guard against the mood of negativism that seems to have
gripped the country. Recently a distinguished business leader said
in India the business is better than the mood," the prime minister
told the 56th meeting of the National Development Council.
In this light, he said, nine percent growth for the next five
years was certainly feasibly, though difficult, if some concerted
action was made at all levels. "I have absolutely no doubt that
our country's longer term prospects are very good."
The economy has been facing a number of challenges this fiscal,
notably the slowing of the growth in industrial output and high
inflation.
Factory production has been sluggish in the past quarter with data
for August showing output at 4.1 percent, while in July it had
slumped to 3.8 percent -- the lowest in almost two years.
On the other hand, inflation, based on wholesale prices, has been
hovering close to double-digits for 10 months now. For September,
annual inflation was registered at 9.72 percent. Latest data
showed food inflation crossing double digits.
The prime minister, however, told the council, which is the
highest decisionmaking body on matters pertaining to central and
state finances, which also approve the Five Year Plans, that the
situation was not as bad as it seemed.
"Investment is, after all, a reflection of the animal spirits of
enterprise," the prime minister said, drawing from John Maynard
Keynes' book, "The General Theory of Employment, Interest and
Money" that describes it as an emotion that influences human
behaviour into spontaneous action.
The council, chaired by the prime minister, was attended by
Planning Commission Deputy Chairman Montek Singh Ahluwalia,
Finance Minister Pranab Mukherjee, some key central ministers and
chief ministers. They discussed the approach to the Twelfth Five
Year Plan (2012-13 to 2016-17)
The prime minister, an economist of repute himself, and a former
central bank governor and finance minister, had absolutely no
doubt that India's longer term prospects were sound.
"Twenty years ago, in my first budget speech as finance minister,
borrowing a phrase from Victor Hugo, I had said: 'No power on
earth can stop an idea whose time has come'. I went on to say 'the
emergence of India as a major economic power in the world happens
to be one such idea'."
Accordingly, he said, this line of thinking has spread across the
political spectrum.
"I am happy to say that in the past two decades, different
political parties, ruling in different times, in different states,
and also in the centre, have pushed in the same general direction
to ensure that my prediction is now a widely accepted reality."
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