New Delhi: Admitting that the economy is going through a difficult period, Prime Minister Manmohan Singh on Friday assured the industry that government will leave no stone unturned to ensure a rebound.
As regards the economy, he said though basic fundamentals are sound and stable, the growth rate in the current financial year is likely to be lower than 6.5 per cent estimated at the time of presentation of the Budget in February.
'We will leave no stone unturned to ensure that the economy rebounds. I appeal to each one of you not to be overcome by negative sentiment,' Singh said while addressing the annual meeting of industry body Assocham.
'Let me begin by stating upfront that we, like most other countries, are going through a difficult period... It (industry) is looking to the government to bring the economy back to a higher growth path. This is a legitimate expectation and is also upper most in our mind,' he said. The Prime Minister assured the industry the government will remain pro-active in ensuring economic rebound.'When things are going well, government should interfere as little as possible. When things go badly, as they seem to be at present, it is the responsibility of the government to become pro-active,' Singh said.
Noting that the most immediate cause of worry is the recent volatility in foreign exchange markets, Singh said, much of this was due to global markets reacting to the likelihood of a withdrawal of quantitative easing by the US Federal Reserve.
'Large volumes of funds were withdrawn from emerging markets and there was a depreciation in many emerging market countries... We too experienced a sharp depreciation in the rupee. In our case, it was perhaps exacerbated by the fact that our current account deficit (CAD) had expanded to 4.7 per cent of GDP in 2012-13,' he said.
The government, Singh said, was committed to bringing the CAD under control by addressing both the demand side and the supply side of the problem, especially to contain demand for gold and petroleum products.
'Gold imports declined sharply in June, and I hope they will stay at normal levels from now on,' he added.On petroleum sector, he said, rupee depreciation has, to some extent neutralise the calibrated steps to reduce under- recoveries of the oil marketing companies.
However, he added, 'our policy of adjusting prices to progressively eliminate under recovery remains'.
On the supply side, he hoped, depreciation of rupee would give push to export efforts and added, the government has been trying to remove the constraints in export of iron and other ores which saw a considerable decline over the last one year.