India shrugs off growth fears

Rising oil prices have led to protests

India's Finance Minister Yashwant Sinha has shrugged off predictions of a slowdown in economic growth, saying the government was in control of the fiscal situation.

Mr Sinha was reacting to the downgrading of India's long term foreign currency issuer rating by international ratings agency Standard and Poor's.

On the basis of my experience during 1998-99 when a gloomy scenario was projected with a growth rate of 3.5 to 4% and the actual growth rate stood at 6.8%, I am confident of a reasonable growth this year

India's Finance Minister Yashwant Sinha

The agency said its prediction was based on a sudden increase in oil prices, which could push up the country's fiscal deficit.

Another independent study predicted 5.8% growth for India during the financial year 2000-2001.

"On the basis of my experience during 1998-99 when a gloomy scenario was projected with a growth rate of 3.5 to 4% and the actual growth rate stood at 6.8%, I am confident of a reasonable growth this year," Mr Sinha told a conference of economic editors in New Delhi.

Fiscal control

The finance minister said the government was in control of the fiscal situation through strict expenditure control and boosting revenues.

He did admit that the rising oil prices had pushed up the inflation, but said it was "inevitable in an economy like India, where we have a large number of administered prices".

Yashwant Sinha: Downgrading not a cause of great concern

Inflation stood at 7.56% in the week ending September 30 - a jump of nearly 1.50% from the earlier week.

It was also the first time since April that inflation had crossed the 7% mark.

"I am very hopeful that the 5.1% target that I had mentioned for the fiscal deficit in my budget this year is a target that we will be able to maintain at the end of the year," Mr Sinha said

The finance minister said the National Democratic Alliance government, which marked its first anniversary last week, would continue with the economic reforms.