Why Finance minister Pranab Mukherjee thinks Indian economy is fine

Finance minister Pranab Mukherjee is hopeful of India’s economy expanding 8.5% in the current fiscal despite a difficult external environment. His optimism is in stark contrast to the independent assessments that peg India’s growth at around 8%. His assessment of the economy:

Investments have not stalled

There had been a demand depression for some time which reflected in some month’s performance. But over a longer period, infrastructure development is taking place. National highways are expanding. Other road projects too are expanding. Power generation capacity has improved. The government has cleared coal mining projects, which should step up investments.

Inflation will moderate

Some inflationary pressure will be there. One factor which we cannot ignore is cost push. Procurement prices have gone up. Consumption patterns have also changed. Measures are being taken but there is some delay in their effect. Moderation will begin at end of monsoon and by year end inflation will drop to 6%-7%.

No slowdown in reforms

There is an impression that we have given up on reforms. There are major enactment that we have ensured through the GOM mechanism. Some bills should go through in forthcoming session of Parliament.

Fiscal deficit manageable

"I have made some additional commitment but by mopping up resources that I am trying to make up, I do believe we cannot sustain a high fiscal deficit.”