India’s growth outlook hazy: PM

“The short-term outlook is somewhat cloudy but I am confident that the Indian economy has the resilience to sustain its growth momentum in the medium run,” Singh said, according to the text of his speech posted on the government website.”

“The Reserve Bank of India stands ready to respond quickly to address the emerging needs of our economy.”

On Monday, the RBI cut its key short-term lending rate in more than four years as part of efforts to shield the economy from the global financial crisis and stimulate growth. The repo rate was slashed by 100 basis points to 8 per cent.

The RBI has also lowered the proportion of deposits that banks must keep in reserve by 250 basis points to 6.5 per cent, its lowest in a year, releasing 1 trillion rupees ($20.3 billion) since Oct. 11.

Private sector economists have revised downwards their growth forecast for India to 7-7.5 per cent from earlier projections of 8 per cent.

“It looks like slowing down in the current year is because of conditions in the global economy,” Singh said. “But, once normalcy returns, we can and we are determined to regain the 9 per cent growth trajectory.”

The government has sought an extra spending of 1.06 trillion rupees during 2008/09 fiscal year, and Finance Minister Palaniappan Chidambaram has said this was intended to stimulate the economy from the “ripple effects” of global turmoil.