Rejecting World Bank's warning of growth and fiscal slippages, the government said on Monday that the banks prediction that India needs major reforms thrust to achieve eight per cent growth was indeed unfortunate, specially at a time when India's economic parameters were actually looking up.
"As of date, all the parameters are sound with exports going up, balance of payment improving, forex reserves at over $83 billion, drought and global slowdown behind us.
Today's position is such that we can definitely achieve targets," finance secretary D C Gupta told reporters in New Delhi.
The World Bank in its latest India Development Policy review had warned that 8.0 per cent growth target in the Tenth Plan will not be achieved without a major revamp of the precarious fiscal situation with primary deficit and public debt worse than what they were in 1991, when India had to sell gold to the Bank of England and subsequently the Indian currency was devalued.
Gupta said the Tenth Plan targets were based on certain assumptions on tax-GDP, Incremental Capital Output Ratio and curtailment of non-Plan expenditure.
"We are in the second year of the Plan period. We still have three more years to go. Looking at the present economic scenario, we are certainly optimistic," he added.
Last fiscal, the first year of the Plan, the country was hit by a severe drought and a global slowdown. Despite this, the country managed to grow at 4.3 per cent.
Asked whether his optimism was based on realism in the face of difficult fiscal situation, Gupta said, "Realism does not mean pessimism. Government had broadly achieved its targets last fiscal."
Asked to comment on the apprehension that provision for Life Insurance Corporation's pension plan and agriculture subsidies would result in overshooting the fiscal deficit target, Gupta said, "Last year too, the government had apportioned sizeable amount for drought relief and yet it was managed without any additional borrowing."
Elaborating on the economy, chief economic advisor Ashok Lahiri said: government's "fiscal marksmanship" has never been bad. "Last fiscal it did not overshoot fiscal deficit targets."
It was not for us to learn from International Monetary Fund and World Bank that the country needs to check fiscal deficit, Lahiri said, adding Finance Minister Jaswant Singh has himself made it clear in the Budget that fiscal consolidation was one of the priorities of the government.
Dismissing the apprehension that major reform measures like introduction of value-added tax and divestment of public sector undertakings has slowed down, Lahiri said: "Introduction of VAT in any federal country including Canada has a tortuous history.
"I would not come to a conclusion that VAT has been shelved," he said, adding it would be put in place once majority of the states are ready.
"We don't want to act in haste and regret in leisure," he concluded.