Growth may slow down

MUSCAT:Prime Minister Manmohan Singh on Sunday conceded that economic growth may slow down “somewhat” next year but said the fundamentals of the economy were strong and the banking system was safe and sound.

Addressing the Indian diaspora and the business community at two functions on the second day of his two-nation tour, the Prime Minister maintained that despite the shadow of a slight fall in the growth rate, India would continue to train its sights on investing $500 billion in the economic and social infrastructure over the next five years.

“Due to the current international economic and financial situation, our growth rate may come down somewhat next year. However, we still hope to achieve a growth rate of seven to 7.5% next year. The fundamentals of our economy are strong. Our banking system and financial institutions are well capitalized and secure,” he said. The high-level committee appointed by him to monitor the situation would suggest short and long-term measures to accelerate growth.

The Prime Minister’s observation means that this would be the first time India faces a dip in economic growth after averaging 9% over the last four years.

Dwelling on the macro-economic fundamentals, he pointed out that the domestic savings rate remained at a healthy 35% and was hopeful of the “young demographic profile” leading to a further increase in the rates of savings and investment over the coming years.

Turning to the Indian diaspora in Oman, estimated at roughly 5 lakh, he observed that their annual remittance of over $780 million is a “reflection of your ties with the motherland and your confidence in India.”

The India-Oman Memorandum of Understanding signed on Saturday for setting up a joint investment fund would open the door for greater investment.