India's finance minister sees 'signs of an upturn'

NEW DELHI - India's economy should return to a high-growth path of seven to eight per cent in the next couple of years, picking up from decade-low expansion, the finance minister said on Saturday.

Earlier in the week, India's Central Statistics Office (CSO) projected that Asia's third-largest economy will accelerate by just 5.0 per cent in the fiscal year ending in March, its slowest rate in 10 years.

"There are signs of an upturn that will take us to a high growth path of six to seven per cent in the next fiscal year (to March 2014)," Finance Minister P. Chidambaram told reporters.

"I have no doubt in my mind that we will come out of this trough and we will climb back to a growth rate of between six to seven per cent next year and then between seven and eight per cent in the year after," he said.

He disputed the CSO's estimate for the current financial year as too low.

"We believe growth will be closer to 5.5 per cent rather than the CSO's estimate of five per cent," Chidambaram said, as he unveiled a scheme to draw more investors into the stock market.

The International Monetary Fund last week forecast that India's economy would grow by 5.4 per cent in the financial year ending in March.

Last year, the economy grew by 6.2 per cent but even that rate is insufficient to create the jobs India needs to provide for its ballooning population.

After notching up sizzling annual growth rates of up to 10 per cent in the last decade, India's economy has slowed sharply due to high interest rates, Europe's debt crisis and sluggish investment caused by domestic and overseas concerns about policy-making and corruption.

On a positive note, Chidambaram said the CSO's growth forecast was higher than the two record lows of 2000-01 and 2002-03.

In 2002-3, the economy grew at four per cent.