Citing uncertainties in global economy and rising oil prices due to tensions with Iran, Prime Minister Manmohan Singh today said India is facing “difficult times” but exuded confidence that the “testing” period would be overcome.
Earlier in the day, the PM had called a high level meet on Wednesday to take stock of the prevailing economic situation.
The meeting will be attended by almost all important Cabinet Ministers.
The UPA government is reeling under heavy pressure from the opposition, a faction of Congress and common public on issues like petrol price hike, inflation and black money.
A sharp fall is also expected in the growth of industrial sectors such as textile machinery, cement and fertiliser in the April-June quarter owing to the rupee’s depreciation, high inflation and fiscal deficit.
India’s growth in January-March was its weakest in nearly a decade, and sparked a new round of economic downgrades from investment banks, with Morgan Stanley cutting India’s forecasts for the second time in as many weeks.
From “gasping elephant” to “stagflation”, analysts have panned India’s quarterly growth of 5.3 percent with some ominous language.The Indian economic growth rate has also slumped down to nine-year low of 6.5 percent in 2011-12.
Five global financial services majors, including Morgan Stanley, Stanchart and Citi, have lowered India’s growth prospects to 5.7-6.4 percent for the current fiscal, a day after markets received a “shock” from nine-year low GDP growth of 6.5 percent for 2011-12.
In their reports to clients worldwide, most of them blamed policy inaction by the government as a major roadblock to the Indian economy, which had expanded by 8.4 percent for two consecutive years — 2009-10 and 2010-11– before plunging to 6.5 percent in the last fiscal.