The Indian economy will swing back to the high growth path over the next three years, from its current lows of around 5 per cent, finance minister P Chidambaram said today.
India's economic growth slipped to a decade low of 5 per cent in 2012-13 and Chidambaram expects growth in the current fiscal ending 31 March 2014 also to be around the same level.
The economy had grown by over nine per cent before it was hit by the global crisis of 2008.
Chidambaram attributes the decline in growth to global factors. The finance minister, however, exuded confidence that the economy will get back to the high growth path in the next three years as the global economic growth rebounds.
"It is true that there has been a slowdown in 2012-13 in current year. The slowdown reflects the world-wide trend. As global economy recovers and as new measures take effect, I am confident that Indian economy will also get back step by step to the high growth path in three years", he said while delivering the valedictory address at Petrotech 2014.
''As the international economy recovers and regains its balance, one thing is certain: demand for oil will pick up. Whatever supply overhang is there will be quickly absorbed. The old dilemma will raise its head once again,'' Chidambaram said.
He said, oil consuming countries will demand lower and stable prices, while oil producing countries will demand high and assured prices.
''I recall the time in 2008 when crude oil prices touched $147 a barrel and, if I may say so, virtually robbed every developing country of about 1 to 2 per cent of its growth rate,'' said Chidambaram.
He said the country is nowhere near the energy security the government has envisaged, adding, ''As long as the oil market is defined by asymmetry between the demands of oil consumers and oil producers, the concerns about energy security will remain.''
After years of rapid growth, the global economy hit a speed breaker and, following the global financial crisis of September 2008 quickly descended into what is now called the Great Recession.
Recovery has been slow, especially in Europe. The signals from other advanced industrial economies, except the US and Germany, are mixed. Among the emerging economies, there is still uncertainty and a sense of crisis, he pointed out.
Chidambaram's optimism is also based on the World Bank prediction that growth in India will touch 6 per cent in 2014-15, up from the current lows of around 5 per cent.
The government is scheduled to come out with revised growth estimates for 2012-13 on 31 January and the advance estimates for the current fiscal on 7 February.
Chidambaram said his government is decided to contain the current account deficit (CAD) at $50 billion in the current fiscal.
The CAD, which stood at all-time high of $88.2 billion or 4.8 per cent of the GDP in 2012-13, is expected to fall further following the measures taken by the government, including curbs on gold imports, he said.
Oil imports, which account for the largest share in the country's overall imports in 2012-13, stood at $164 billion, against the total import bill of around $491 billion during the financial year.
"A developing country like India cannot afford such a huge import bill or such a high level of CAD. Therefore, we were constrained to take some hard measures, including conservation measures and these measures have helped us contain the CAD," he added.