India has potential to sustain high growth: Bansal

The government today said that the country has the potential to maintain a high growth rate in the long run as the saving and investment rates are robust.

"Yes sir. The savings and investment ratios, which determine the growth potential of the economy are robust," Minister of State for Finance Pawan Kumar Bansal said in a written reply in the Lok Sabha.

He said the gross domestic savings have increased to 34.3 per cent of the gross domestic product (GDP) in 2006-07 from a level of 31.8 per cent of the GDP in 2004-05. Gross domestic capital formation for the same period rose to 35.9 per cent of the GDP from 32.2 per cent in 2004-05.

The 11th Five-Year Plan envisages an average growth rate of 9 per cent per year, a continuation in the uptrend in domestic investment observed in the 10th Plan to an average of 36.7 per cent of GDP, which will be supported by the domestic savings rate of 34.8 pert cent of GDP, Bansal said.

The economic growth during the first half of the current fiscal stood at 7.8 per cent as against 9.3 per cent a year ago. However, due to the global economic meltdown, economists and experts have scaled down the GDP projections for the current fiscal.

Prime Minister Economic Advisory Council has said it will "re-look at the GDP forecast" while multilateral funding agencies like IMF and World Bank have forecast a further moderation in the economic growth of the country to 7.8 per cent and 6.3 per cent in 2008, respectively.

Fears of slowdown in Indian economy got accentuated after negative growth in industry in the month of October for the first time in 15 years.