New Delhi: Concerned over economic slowdown, Prime Minister Manmohan Singh on Tuesday said the government is committed to containing the fiscal deficit to 5.3 percent of GDP this fiscal and various steps are being taken to revive economy, which include faster clearances to mega projects.
Addressing Conference of Governors, he said Indian economy has slowed down considerably in the last two years and the growth in this fiscal year will be much below the average growth of about 8 percent that achieved in the last decade.
"The factors that have caused this slowdown lie both outside and within our country.
"It is imperative that we do everything possible to reverse this trend and the Government has made concerted and serious efforts in recent months to revive investment and growth," Singh said.
As per the latest estimates of Central Statistical Organisation (CSO), India's economic growth (GDP) is likely to slow down to 5 percent this fiscal as against 6.2 percent achieved last year.
However, Finance Minister P Chidambaram has exuded confidence of over 5.5 percent economic growth in 2012-13.
Stressing that large fiscal deficit has been a specific cause of concern, he said a fiscal consolidation roadmap has already been put in place to lower it gradually.
"We intend to contain fiscal deficit at 5.3 percent of GDP and reduce it to 4.8 percent in the next year," he said.
Singh further said efforts are being made to fast track investment proposals, with particular focus on clearances from the environment and forest angles as well as towards removal of infrastructural bottlenecks.
"However, the climate for investment is also affected by the activities of State Governments. Factors like the state of law and order, and how easy or difficult it is to acquire land and obtain electricity connections also have an important influence on the climate for investment," he said.
The Prime Minister informed the Governors that the reasons for slowdown in the economic growth during the last two years could be attributed to domestic as well as global factors.
Policy measures, he further said, announced in the current year have "generated optimism" which is reflected in an upturn in the Business Expectations Index for the October-December quarter, the Purchasing Managers' Index in October-December and buoyancy in capital markets.
Internal accruals of the corporate sector, necessary for a pick-up in investment, have also started improving, he said adding, there has also been a moderation in core inflation.
"These factors point towards recovery in GDP growth in the second half of the current year," he said.
The economy expanded by 5.4 percent in the first half of the ongoing fiscal.
Singh also said the recent direct cash transfer scheme will help improve targeting, reduce corruption, eliminate waste and enhance efficiency in the public delivery system.
In the past few months, the government has taken a slew of initiatives towards economic reforms, including further liberalised FDI policy, capping supply of subsidised cylinders and partial decontrol of diesel prices.