When the US sub-prime crisis came to fore, the Indian Finance Minister (FM) and the other spokespersons of the Govt said, India may not be able to do 9.0 % like 2007-08 but surely 8.5-8.0 % was certainly achievable. In Jan-Mar 2008, Indian GDP actually grew 8.8% p.a.
Then the crude prices started surging and inflation touched double digit. Suddenly, inflation became top priority and the mandarins of the finance ministry started talking more about inflation than about GDP. Whenever the FM was pinned down to quote an estimate, he would still say India would achieve 8 % growth.
In September 2008, when the US sub-prime crisis, became a full-blown global credit crunch, leading to a huge stockmarket correction, the FM insisted we are on track to achieve 8 % GDP growth.
October was among the worst months, when the stress of the crisis was beginning to show severely not only in the stockmarkets but also in the fore-head of the FM and even PM. FM appeared on several occasions on TV to reassure that Indian banking system was safe and Indian economy was doing fine.
Of late, the tune of the government is beginning to change. The FM is still parroting the 8.0% GDP tune, but the PM has already admitted that Indian economy will also be impacted by the global crisis. PM has admitted yesterday that India may achieve only 7.5-7.0 % GDP growth rate this year.
The FM is yet to openly admit that not only the stockmarket, the real economy is also facing the impact of the global crisis. He still seems to believe that India has a divine right to grow by 8.0%p.a , come what may. He and his statistics department, may be able to show 8.0% through some jugglery, but people are not going to believe them. IMF has already downgraded the estimate for GDP growth in India for 2008 to 7.8% and 2009 to just 6.3%, reports Mint.
It is time, our FM, accepted the truth and acted on the ground, rather than just giving false assurances through the media.