Calling on industry leaders to partner the government in efforts to reverse the impact of economic slowdown and achieve higher economic growth, Prime Minister Dr. Manmohan Singh on Wednesday said the slowdown in growth is a temporary and that his government would prove 'prophets of gloom' wrong.
Addressing the Confederation of Indian Industry (CII) here, Dr. Singh said: "A corrective strategy must be based on a correct analysis of the problem. Our growth has slowed down to 5 percent, which is clearly disappointing. But this is not a permanent reduction in our longer-term growth potential. As I have said, our economy grew at 8 per cent over the past ten years. If we go back to 15 years, the average was also 7.5 per cent. This kind of dynamism doesn't disappear suddenly, and we must prove the prophets of gloom as wrong."
"We are seeing, I believe, a temporary downturn, which does happen. After all, business cycles have been a recurrent theme of all textbooks in economics in the past. I believe, we have seen a temporary downturn, which does happen from time to time. We must recognise it as such and take corrective action," he added.
Stating that the Centre is determined to do everything possible to achieve the fiscal deficit roadmap, Dr. Singh said: "Part of the problem is due to the global slowdown, which has affected all countries. The world, which recovered well from the 2008 financial crisis, is stumbling badly over the second crisis, provoked by the sovereign debt problems of the Eurozone. Growth is negative in the Eurozone and zero in Japan."
"I have just returned from the BRICS Summit. Brazil is growing at the rate of 1.5 percent, South Africa at the rate of 2.6 percent and Russia at the rate of 3.7 percent. China has done much better at 7.5 percent, but this is much lower than the rate at which China was growing earlier," he added.
"We cannot do much about the global slowdown. We can only wait for the world to get back to more normal conditions. In the meantime, we have to accept that our exports will be weak and our current account deficit in the Balance of Payments, higher than it should be. We have to learn to cope with these problems. But we can act forcefully to deal with the many domestic constraints that have arisen, which must be removed if the economy is to perform at its full potential," he said.
"The first step in dealing with our domestic problems is to restore macro economic balance. Over the past several years, our fiscal deficit expanded to a level, which is simply unacceptable. This is partly because of a conscious policy of fiscal stimulation, which was followed by many countries," he added.
Asserting that if the business atmosphere was unduly optimistic in 2007, it is unduly pessimistic today, Dr Singh said consensus today is that unless the government acts swiftly, growth already decelerated will be perennially stuck at five per cent.
The Prime Minister also said government can act forcefully to remove the many domestic constraints that have arisen to get the economy to perform at full potential. (ANI)