Economy to grow at 7% -- FM

Economy to grow at 7% -- FM
ENS ECONOMIC BUREAU

JULY 6: Finance Minister Yashwant Sinha expects the economy to grow at 7 per cent during the current financial year as compared to 6.4 per cent during the last fiscal.

According to Sinha, the economic growth was expected to be better during the year because of normal monsoon, good agriculture output and robust industrial growth. The industrial sector, he added, has been doing well during the current year.

Addressing members of the consultative committee of finance ministry here on Thursday, Sinha expressed the optimism that, "our services sector has also grown robustly and will continue to do so."

Sinha added that the world perception about India has changed due to advances in the field of information technology and hoped that in the next few years about 70 to 80 lakh would be created in the IT sector.

The finance minister also emphasised that globalisation was a necessary part of the process of economic development. He said that the extent of globalisation over the last nine years has been nominal as during 1998-99, foreign direct investment (FDI) into India constituted only 0.3 per cent of the global FDI flow. Similarly, he added, India's share in global exports was only 0.6 per cent.

Therefore, he argued, globalisation could not be blamed for problems like poverty and unemployment which have existed for 50 years. He said, "while globalisation can help in enhancing economic growth, it is not a panacea for every ill facing India society." The central theme of economic reforms, he stressed, "remains elimination of poverty and generation of adequate employment opportunities."

Allaying fears expressed by some members about the possible impact of globalisation on small scale industries (SSIs), the finance minister said that the government would continue to accord very high priority to the growth of the SSI sector in view of its contribution to employment and exports.

The minister said that the government would continue to accord very high priority to the growth of SSI sector in view of its contribution to employment and exports. He said that since the beginning of economic reforms in 1991-92, when employment in SSI sector was 129.8 lakhs, it had grown to 171.58 lakhs by 1998-99.

The government's concern, he said, was to strengthen the small scale industries to enable them to become both domestically and globally competitive.

Sinha also emphasised the fact that the Indian economy has gained greater resilience during the 1990s as demonstrated by the stability in the face of both internal and external shocks. He said that it goes to the credit of Indian policy makers that India remained largely immune from the negative affects of South-East Asian crisis during 1997-98. It also withstood the sharp rise in the oil prices since then, he said.

The finance minister also stressed that efforts were being made to formulate new schemes to directly attack poverty and unemployment. He said that there was a consensus on the need to improve the quality of life of the common people especially in the rural areas. The minister said that globalisation and economic reforms would be seen as elitist concepts and would have little meaning for the common people unless they yield tangible benefits to the poorer segments of the population.

The minister urged the state governments to make special efforts to improve public services such as roads, water supply, health, sanitation and education at the village level.

Participating in the discussion,the members generally agreed on the inevitability of globalisation but underlined the need to channelise the benefits of globalisation to poorer sections of the population.