ADVERTISEMENT

Economic Growth of 8-9% Doable: Arun Jaitley

Oil prices have helped the government re-plan expenditure, Finance Minister Arun Jaitley said at a panel discussion at the World Economic Forum annual meeting in Davos.
Oil prices have helped the government re-plan expenditure, Finance Minister Arun Jaitley said at a panel discussion at the World Economic Forum annual meeting in Davos.

Davos: With global headwinds hitting emerging markets as well, Finance Minister Arun Jaitley on Wednesday said volatility had become a global norm, but India could certainly grow at 8-9 per cent in a friendlier global climate.

The view was echoed by business leaders from India and other countries here at the World Economic Forum Annual Meeting even as they felt that not "all perfect storms" in the world today would hit the Indian economy.

"Certainly, the world is facing a difficult and challenging situation. I don't think we are going into extreme conditions because there is predictability but volatility today is the norm and no country is immune to it," Mr Jaitley said.

Admitting that exports have shrunk, currencies and stock markets are impacted, Mr Jaitley said at a panel discussion here on the India growth story that the government is always trying to prepare itself to meet such challenges.

"The fact is we are (the) fastest growing economy, but we can do much better. Given a better climate and global situation, we can do much better. In a friendly global environment, we can do it (8-9 per cent)."

"We had two bad monsoons while domestic and global issues impacted several sectors and that in turn has impacted banks. We are growing at 7-7.5 per cent. In a more favourable environment, getting an extra 1-1.5 per cent is not difficult," he said.

"Oil prices have helped us re-plan the government expenditure. One of the biggest reforms that have happened today is rationalisation of subsidies," the minister further said.

Speaking in the same session, noted economist Nouriel Roubini, widely known as 'Dr Doom' because of his earlier predictions, said he did not see a global financial crisis like that of 2008 imminent, but there were risks on several fronts and there are "many perfect storms".

"There are proxy wars in various parts of the world. Fall in oil prices should be a positive for the global economy, but the reality is it is leading to sharp negative reactions in various markets, including in India," he added.

He said falling commodity prices were a net positive for India, but low oil prices also presented a risk to its growth.

On the positive side, overall the macro factors put India on a positive path, compared with its position a couple of years ago, and then there has been "good luck" in terms of falling commodity prices and "the government should push ahead with its reform initiatives in various areas".

Apart from investments in human capital and steps to safeguard agriculture and irrigation from weather volatility, there are various areas where work should be done, he said.

Industrialist Sunil Mittal said not all of these perfect storms would negatively impact India.

"Obviously, India cannot be an island in itself and there would indeed be some impact, but the government is also well aware of that and steps would be taken."

"I remain optimistic about India, principally because of entrepreneurial energy that I see in the country. FDI is on a high and it is rising. I have a lot of people who say they are very keen to invest and I am sure the FDI levels would rise significantly, going ahead," he said.

He also said Prime Minister Narendra Modi has a tremendous liking among the business community and what he should do is to call top 100 industrialists to his room and tell them to invest in the country.

"Ease of doing business is already a major agenda for the government, but still there are some issues that remain pending and hopefully, they would be addressed in the upcoming Budget," he added.

Cisco's John Chambers said he also remains optimistic about robust growth in India.

"A million new jobs per month is very much doable in the country. There will be a new generation of start-ups. Cisco is doubling down again in India."

"India should not miss the chance to tap its growth opportunities and it should ideally lead the fourth industrial revolution," he added.

Foreseeing a huge potential for start-ups in India, Mr Jaitley also said the freedom from the government is a must and the first condition for them is to prosper.

"As far as the conventional economy is concerned, the results (of government initiatives) will surely show up."

On new IT start-up companies, he said they should be allowed to grow uninterrupted. "I personally feel why Indian IT in a natural course grew earlier was because there were no laws regulating it," he said, recalling the robust IT sector bloom that India saw in 1980s and 1990s.

Noting that things today have changed, Mr Jaitley said that for the recent start-up event, "we got requests far exceeding the number of participants we had planned".

"There is a huge potential for India. One of the first conditions that is required is freedom from the state," he said.

"There should not be any intervention from the central or state governments. We need to create an environment for making capital available to them. States have a big role. The start-up campaign is one campaign."

"The other campaign that is going to be implemented in the next few months is extending support to the deprived sections of society to turn entrepreneurs," he added.

Mr Mittal noted that India could not create any Google, Facebook or Cisco although China could do so by blocking a large number of foreign companies.

"But Indian entrepreneurs have found another way and now they are creating OyoRooms on the line of BnB while Ola is fighting Uber," he added.

"It is a year of opportunity and challenges... ," Mr Jaitley said.

Mr Chambers said 2016 would be a year when India will break its base. Mr Mittal also said 2016 would a year of India.

Andhra Pradesh Chief Minister N Chandrababu Naidu, who was in the audience, said his state was ready to contribute funds towards the national digitisation programme and promised full support on all fronts, including broadband.