India will increasingly look to structural reforms as it deepens the reform process to sustain economic growth in the context of a challenging global scenario that is less supportive of growth in emerging economies, finance secretary Arvind Mayaram said.
He said the slowdown in India's economic growth has been partly due to its structural problems while external factors, especially increased volatility with unwinding of unconventional monetary policies in the US and elsewhere have affected capital formation in India.
A finance ministry statement earlier had stated that the forthcoming budget to be presented by finance minister Arun Jaitley will herald the reform process to put the economy on a sustainable and balanced high growth path.
"India has elected a new government. We will be strengthening our growth strategies as per the priorities of the new government. This will deepen the reform process to put the economy on a high growth path which is in line with the G20 objective of strong, sustainable and balanced growth," Mayaram said at a meeting of finance and central bank deputies of G-20 nations in Melbourne, Australia.
He said the recent developments in Iraq have further complicated the problem by bringing further volatility in oil prices, which is putting pressure on its finances at a time when emerging economies in general are passing through a phase of tepid economic activity.
"Recent developments in Iraq have created huge uncertainties with an overhang on the global economy. The volatility in petroleum prices have put pressure on the financial system in countries like India," he added.
Mayaram said the structural problems have been exacerbated by external environment of market volatility with unwinding of unconventional monetary policies in the advanced countries.
G20 nations should continue to reinforce backstop measure in close coordination among member central banks to minimise negative spillovers, Mayaram said.
The announcement of withdrawal of monetary stimulus by the US Federal Reserve last year had played havoc in the global capital and currency markets, including India. However, the impact of the volatility was reduced after the US started a calibrated withdrawal of stimulus package or monetary expansion.
A meeting of G20 ministers had, in February, agreed to develop realistic policies with the aim to lift collective GDP by at least 2 per cent above the trajectory implied by current policy.