India can grow at 9% amid global recession: PM

The Indian economy can grow at 9% despite a global downturn powered by higher public spending, Prime Minister Dr. Manmohan Singh said. "We cannot spend our way to prosperity though in the present situation there is considerable scope to spend particularly in infrastructure," Singh told the parliament today. He also stated that the Indian economy could achieve 8-9% growth with a high savings rate. The Government has scope for increasing public spending, particularly on upgrading infrastructure, despite a high fiscal deficit, the Prime Minister said today. "There is considerable scope for increasing public expenditure, particularly on infrastructure projects," he told the Lok Sabha.

Even though government finances are under strain, Dr. Singh said there is maneuverability to spend more on roads, ports and the rural jobs program in the short run. The economy grew at more than 9% in three of the past four years and may expand at 7% in the current fiscal year, Dr. Singh said. The budget deficit stood at 6.2% of gross domestic product (GDP) in the year ended March 31, 2009, more than double the Government’s estimates. Moody’s has kept India’s local-currency long-term rating at Ba2, two levels below investment grade, while Standard & Poor’s has a BBB- rating on India, the lowest investment grade.

Dr. Singh said his government is committed to stamp out terrorism and left-wing extremists, who are active in areas of the country rich in metals and minerals. If their activities are left uncontrolled, it will hurt the climate of investment in the country, he added. "At stake is the future of 1.5bn people living in South Asia," Dr. Singh said. "It is in our vital interest to try again to make peace with Pakistan but I do recognize it takes two hands to clap."