India's sagging economy would recover from stress in the second half of this fiscal to return to high growth over the next two years, Finance Minister P. Chidambaram said Saturday.
"The country's economy will recover from stress this fiscal (2013-14) as it has enough the capacity to get over it to post higher growth than last fiscal (2012-13)," Chidambaram said on the margins of a bank function here.
In view of a normal monsoon resulting in higher growth in the farm sector and steps to boost demand in services and manufacturing sectors, Chidambaram hoped the national gross domestic product (GDP) growth this fiscal would be better than last fiscal (2012-13) when it was 5 percent as against 6.5 percent in 2011-12.
"The recovery will enable the economy to grow 6-7 per cent next fiscal (2014-15) and return to 8 percent growth in fiscal 2015-16," the finance minister said.
The economy has been projected to grow at 4.5-5 percent GDP this fiscal (2012-13) as against 5 percent last fiscal (2012-13) due to slow down in the first two quarters.
"Last year, pundits, analysts, rating agencies and all the wise people, who appear on television channels daily, told me that we cannot contain fiscal deficit. I am happy that we were able to surprise them. We did contain fiscal deficit at a level below (4.9 percent) what I had indicated (5.2 percent)," Chidambaram said after unveiling 101 branches of the State Bank of Mysore (SBM) simultaneously through remote switch.
Referring to the current account deficit (CAD), the finance minister said he would ensure it is restricted to $70 billion this fiscal as against $88 billion last fiscal.
"We were told that we will not be able to contain CAD. But I will surprise them (pundits) once again by containing it well below $70 billion. Though I do not have a magic wand, I say this because we have intellectual capacity and the people who give us confidence that we can overcome the stress period," Chidambaram said.
Extolling the people for being very good in savings, the finance minister said even in the worst of times the savings rate did not go below 30 percent.
"I have no doubt everyone saves, which is a great fortune of our country. If those savings are channelised into productive investments and if we create a climate where people can take risks, I am sure we will get over this period of stress," he said.
Noting that the country was blessed with very good economists, economic advisors and administrators, Chidambaram said a fresh set of policies could be drafted through dialogue with stakeholders and time could be given to them for implementation.
"Believe me, sooner than later we will find results," he added.