Economy will perform better than last year: PM

PM says Moodys forecast cause for concern,but should not lead to unwarranted conclusions

Prime Minister Manmohan Singh on Saturday admitted that the downgrade of Indias growth forecast by Moodys was a cause of concern but added that he was hopeful of bettering last years growth of 6.5 per cent since the countrys fundamentals were strong.

It is a cause of concern but one should not draw unwarranted conclusions, Singh told reporters when asked to comment on ratings agency Moodys analysis of the Indian economy,which has scaled down its forecast for Indias economic growth to 5.5 per cent earlier this week.

The fundamentals of Indian economy are strong. Investments and savings are among the highest in the world. I am hopeful,we will do still better than 6.5 per cent growth performance of last year, the Prime Minister told reporters at Rashtrapati Bhawan,after attending the swearing in ceremony of Vice President Hamid Ansari.

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Investments and savings still remain the highest. I am confident that this year will be better, Singh added.

Singhs comments,however,came under sharp criticism from the BJP with Leader of the Opposition in the Rajya Sabha Arun Jaitley contending that the Prime Minister is in a state of denial.

The patient does not want to be treated. He is convinced that he is not unwell…. The Prime Ministers statement that fundamentals of the Indian economy are strong comes as a surprise. It clearly shows that the Prime Minister is living in denial about the real state of the India economy, Jaitley told reporters on the sidelines of the function.

Adding that government should treat the Moody analysis as a wakeup call,Jaitley said Singh and his government are behaving like a patient who refuses to accept that he is ill even when experts outside the country as well as within were commenting adversly on the economy.

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The sentiment is low. India is no longer an investment destination. Inflation has reached unacceptable levels. Infrastructure ministries are moving slowly. Corruption has created an adverse environment. This government is being accused of policy paralysis, Jaitley said.

Moodys Analytics had said Indias GDP growth rate is likely to be 5.5 per cent this year,while in 2013 growth is expected to be 6 per cent,adjusted from 6.2 per cent earlier.

Raghuram Rajan appointed CEA

Raghuram G Rajan,former IMF chief economist,has been appointed as the Chief Economic Advisor (CEA) in the finance ministry.

The Appointments Committee of the Cabinet cleared the appointment of Rajan as the new CEA on Friday.

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Rajan was also an honorary economic advisor to Prime Minister Manmohan Singh and was involved with the report on financial sector reforms,which was authorised by the Planning Commission. At present,Rajan is a professor at the Booth School of Business,University of Chicago.

The position of the CEA has been lying vacant after Kaushik Basus term ended on July 31.