Global downturn drawing to a close, says PM

New Delhi: Prime Minister Manmohan Singh on Tuesday said the global economic slump that had also hit India was finally drawing to a close with a pick-up expected in the ensuing months, even though poor monsoon did not bode well for the country.

"We have been through a difficult year because of the global economic downturn, which is only now coming to an end with a slow return to normalcy in the months that lie ahead," the Prime Minister told a meeting of the full Planning Commission, which he chairs.

"But the country has also seen a poor monsoon," he told the meeting at the plan panel's headquarters at Yojana Bhavan here - the first after the United Progressive Alliance (UPA) government was voted back to power.

"I agree with the general approach that while we must do everything necessary to tackle the drought, we should not be over-pessimistic. We are in a very strong position to manage the consequences of the drought," he said.

"Our food stocks in particular are very high."

The Prime Minister's comments came against the backdrop of drought being declared in 252 out of India's 626 districts, even as fresh official data said Indian economy grew 6.1 per cent in the first quarter this fiscal.

The meeting, attended by Finance Minister Pranab Mukherjee, Agriculture Minister Sharad Pawar, Power Minister Sushilkumar Shinde and Planning Commission Deputy Chairman Montek Singh Ahluwalia, among other key policymakers, also reviewed India's energy policy.

"Energy is vital to our economic growth. This is an area where we are a deficit economy. We import over 70 per cent of our petroleum energy needs and are also moving to a deficit position in coal," Manmohan Singh said.

"Rational energy policies are critical for rational responses to the threat of climate change. This is a new compulsion. We need to assess whether we are on track in critical aspects of our energy policy."

The prime minister said each energy sub-sector in India was the domain of a different ministry, which often meant non-symmetric policy stance. In other words, principles adopted to determine policy in one sector are not the same as in another.

He, accordingly, called for a proper assessment of how the country's Integrated Energy Policy, approved by the government in December last year, was being implemented so that changes can be made accordingly.

During the meeting, the Planning Commission also presented a paper before the members in which it expressed optimism about high growth path once again from the next fiscal, if the monsoon were normal during the ensuing years.

"We project growth of 8 per cent in 2010-11 and 9 per cent in 2011-12. This is optimistic but not impossible. If we have normal monsoon in 2010-11, we can expect a strong rebound in agriculture next year," the paper said.

The plan panel paper also said India's merchandise exports - which dipped for the 10th consecutive month in July - will also be able to register a growth next year because of the turnaround expected in the global economy.

"Exports would also recover as industrialised countries return to positive growth of one per cent in 2010 with further acceleration in 2011."