Strong macroeconomic factors are likely to push the economic growth to 5.5% in the current fiscal, Finance Secretary Arvind Mayaram said on Friday at the Shriram Sanlam awards for excellence in financial journalism.
"Growth is going to claw back because our fundamentals are strong and macroeconomic parameters are well under control. The expectation is that in the current fiscal we should be around 5.5% and next year we should cross 6%," said Mayaram.
He said the economy is likely to get back to a higher growth trajectory going forward. The newly-appointed finance secretary said that inflation continues to remain an area of concern, but refused to comment on the impact of El-Nino weather phenomenon on the inflation. "Inflation is a worry. I won't be able to say anything about El-Nino because the India Meteorological Department (IMD) hasn't said anything definitively," he said.
The weather department has forecast that the country may get below normal monsoon this year and there is a 60% possibility of El Nino during monsoon. Mayaram said the country's food stocks are enough to deal with drought situation. "We must remember that our food stocks are well above the required level, we have more than 280 million tones with us. I think we would be able to take care of that aspect if there is a problem," he said. "But for now, I am assured the monsoon should be normal and on track," he added.
About removing the curbs on gold import, Mayaram said, "I think whether it is gold or any other imports, we will be watching very carefully going forward how the situation is and if the curbs have to be eased, they will certainly be eased in a calibrated manner."
He said the victory on CAD cannot be declared because the country is dependent on imports, and some of those items do not have flexibility. The government and the Reserve Bank will take all the steps to bring the growth back to higher trajectory, he said. "Our concern is that we need to incentivise growth and therefore we need to take steps that will get growth back," he said. On the current account deficit, Mayaram exuded confidence that it will come under the USD 35 billion mark for FY14.
"CAD is expected to be less than USD 35 billion, down from the estimated USD 88 billion," he said speaking at the Shriram Sanlam Awards for excellence in financial journalism. In FY2012-13, the CAD had touched an all time high of 4.8% or USD 87.8 billion, largely due to a sharp depreciation in the rupee. This led to curbs on imports of non-essential commodities like gold. The strong action taken by the government resulted in the deficit narrowing down consistently and some analysts are even saying that it will come down below the 2.5% of the GDP mark for FY14.