After india's current account deficit touched a record 6.7% of GDP in third quarter, Prime Minister Manmohan Singh pegged it at 5% of GDP in 2012-13 and projected only gradual reduction initially thereafter.
"In the meantime, we have to accept that our exports will be weak and our current account deficit higher than it should be," he said.
A visibly confident Singh, speaking at the annual general meeting of the CII after some five years and, more significantly, in his first speech to an industry chamber after the Budget in February, said that while he recognised that India Inc was in a pessimistic mood, he would like to hold a 'contrarian' view.
In an uncharacteristic but subtle jibe, Singh said that during the preceding period of high growth, industry felt that the government's role in the economy would be limited. Now, there has been a "rediscovery of the importance of the government", he added, to a smattering of applause.
"Our future isn't 5% growth," he said and added, "business cycles are recurrent themes in all textbooks of economics". But while there was clear admission that industry would have to learn to cope with the situation, Singh also emphasised that the government would play its part in restoring the macroeconomic balance.
Restoring the fiscal deficit, he said, was important not just for international analysts but also for bringing in investment and controlling inflation.
On the Cabinet Committee on Investment (CCI), Singh said that he was encouraged by the progress that had been made over the last months, however added that its "full effect will be felt in the next few months" and that he was committed to "do even more (clearances of major infrastructure projects) in the coming months".
Singh's focus on underlining what the government had done in recent months to aid industry was only diluted towards the end of his address, when he called on India Inc to partner on skill and employment development. Industry, he said, also needed to ensure that "affirmative action shouldn't just be a paper exercise".
He said his government will take all steps to ensure that foreign inflows remain strong for the next two years.
Singh said the government is reviewing the FDI policy comprehensively to assess its liberalisation further. "On domestic side, he said, the government is working to resolve coal and gas linkage problems for power sector. I hope we will see results in the next three weeks," he said.
The prime minister acknowledged that corruption and bureaucratic inertia are problems and managing coalition is not esay. However, he added, "these are not new problems and were there even when the economy was growing at 8%".