Admitting that reducing the burgeoning fiscal deficit would be a difficult task, Finance Minister Jaswant Singh on Saturday said the "feel-good" factor has returned and the economy was poised for a high growth riding on good monsoons, industrial recovery and buoyant capital market.
"My target is very high. India should have the highest growth rate in the world. I cannot give a figure but wait for some time and the picture will be clear," he said, adding that monsoons have been good, and productions and exports are up.
Referring to his interaction with former Reserve Bank of India Governor Bimal Jalan and Saturday's meeting with new Governor Y V Reddy, Singh said all economic factors were regarded as "positive".
While RBI forecasts a GDP growth at "significantly" higher than 6.0 per cent, International Monetary Fund has pegged it at 5.5 per cent this fiscal.
"There have been discussions about India even in the IMF. Except India, there is no country where all the economic parameters have been doing well," he said.
Singh attributed last year's slump in GDP growth of 4.4 per cent to the decade's worst drought, global slowdown, Iraq war, oil price volatility and the Indo-Pak border tension.
Despite the rise in international oil prices, he said India's inflation rate did not rise substantially while forex reserves increased to all time high.
Singh, however, admitted that there was some difficulty with the burgeoning fiscal deficit and internal debt.
"There is some difficulty with fiscal and revenue deficits. But it can be checked. With the passage of Fiscal Responsibility and Budget Management bill, the government will be able to contain fiscal deficit by 2005," Singh said.
However, the financial position of the states has improved significantly.
With the new cash management system, he said, there would be better use of resources by all the ministries.
With higher growth, Singh said the economic inequalities would also come down.
"If domestic production grows, national income will also grow, and the per capita income of the people is also set to rise," he said.
Favouring a gradual approach towards reforms, Singh said, "We should not rush; but at the same time reforms should not be delayed. There should be a balance."
The rise in Bombay Stock Exchange Sensitive Index to 4,400 points in the recent days is reflective of the restoration of investors' faith in the market, he said.
"Investors faith has been restored and small investors are coming back in the equities market. This is evident in the buoyance in the primary and secondary markets," he said.
Singh also expressed the hope that foreign direct investment flow into India would rise in the coming months.
"I think the amount of FDI that should have flowed into the country has not taken place," Singh said, adding there is a time lag between framing of favourable policies and the actual inflows to take place.
The government has taken a number of proactive steps to attract investments including reduction in duties, Jaswant Singh said.
Inflow of foreign direct investment declined by 24 per cent to $4.66 billion in the last fiscal year. During the first four months of this year, the FDI inflows were down by almost 50 per cent at over $500 million.
"(Even) if we want to be FDI-led economy, we can't. We already have enough internal resources in the domestic market. We need FDI but we cannot sell the country," he said.
Instead of focusing on FDI, Singh said, the credit delivery system should be more stable.
The government has undertaken a number of reforms to improve the market and legal system to create a congenial environment for investments.
Singh favoured a better credit delivery channel and softer interest rate regime in the economy to reduce the cost of borrowing of industry, agriculture and exporters.
"The cost of borrowing for industry and agriculture should not be high. It should be realistic with the global trends," he said.
In this regard, he said, the government was planning to come up with a special scheme for the common people, who do not invest in equities and are at a loss due to the reduction in interest on deposit and debt instruments.