The finance minister today said that the government would focus on boosting domestic demand in the coming few months, as the possibility of a robust recovery in western economies seemed bleak in the immediate future. With some countries taking protectionist measures to avoid a surge in inflows, the minister said domestic demand would hold the key to India’s growth.

“The focus is on generating domestic demand by investing in agriculture, infrastructure and industrial revival. In this way we will continue with the stimulus for a while but winding down is imminent,” Pranab Mukherjee said addressing the India Economic Summit organised jointly by the Confederation of Indian Industry (CII) and the World Economic Forum.

The index of industrial production (IIP) for June, July and August 2009 shows signs of industrial recovery with the economy clocking 8 per cent, 7 per cent and 10 per cent industrial growth respectively. “The key is to continue with the momentum. We have clocked negative exports in the past 12 months and a recovery in EU, Japan and America, which constitute 60 per cent of our exports, will take some time,” he added.

The minister expressed optimism saying that huge investment in agriculture technology and innovation and infrastructure development in roads, ports and power would be possible as the economy is supported by a high rate of savings as a portion of the gross domestic product. “The domestic savings rate has grown from 24 per cent in 2001 to 36 per cent in 2007-08. Investment has also gone up from 22 per cent to 39 per cent in the period,” he said. In his view India could clock 7 per cent plus growth in 2010-2011 and 8 per cent plus in 2011-2012.

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