India's GDP to rebound to over 7% in 2-3 years: Mayaram

Says the policies pursued by the Emerging Market Economies have been effective to bring growth back

India is following economic growth inducing policies and is confident that the GDP will rebound to over 7% in 2-3 years, Finance Secretary Arvind Mayaram said today while emphasising that business confidence is back.

Making an intervention during the G20 Deputies Meeting here, Mayaram said the Indian Government announced a slew of policy reforms and Budget reflected this in full measure.

"From 4.7% growth in the last fiscal, the Indian economy grew by 5.7% in Q1 of the current financial year 2014-15. Business confidence is back and even though still tentative, growth in industrial sector, specially manufacturing, is showing an uptick.

"We are confident that by pursuing growth inducing policies, the Government would contribute fully to going back to a +7% growth within two to three years," he said.

He further said the policies pursued by the Emerging Market Economies (EMEs) to bring growth back have been effective and India stands committed to the incremental 2% growth in the global GDP.

Mayaram, however, pointed out that while it would be imperative for the EMEs including India to continue the path of structural reforms, the uncertainty and volatility in external environment is worrisome and needs the attention of the G20.

"As the US Fed withdraws from unconventional monetary policy, there will be an overhang on asset prices in the Emerging Markets and therefore, volatility in the currency markets," he said.

The decision on the exit from the Quantitative Easing (QE) programme that came in after the US FOMC (Federal Open Market Committee) meeting yesterday had an impact on the currency markets of many of the emerging market economies.

"The strength of G20 lies in taking international collaborative actions and not limiting to the individual country growth strategies. This concern was also raised by Mexico," the Secretary said.

Mayaram said the as discussions are taking place on domestic policies and actions, "we should also be discussing" G20 driven collaborative solutions which would reduce the impact of the possible near term repricing.

While countries would have to take actions commensurate with the space available to them, as IMF has themselves noted, macro prudential policies would be ineffective during downswings, he said.