India capable of 10 percent growth

India can deliver a 10 percent growth provided the farm output touches four percent annually and industry and services grow in double digits, top bureaucrats said here Tuesday at a meeting with industry captains.

“Sustained double digit gross domestic product (GDP) growth is largely contingent on the farm sector achieving sustained four percent GDP growth over the coming years,” said Cabinet Secretary K.M. Chandrasekhar.

He laid emphasis on creating and meeting the rural demand to achieve sustained and inclusive growth.

“During the economic slowdown when the exports markets had shrunk, it were the rural markets that industry had turned to for sustained growth,” Chandrasekhar said during a closed-door deliberation with secretaries of various ministries and top business leaders on whether India can achieve a sustainable growth rate of 10 percent by 2014.

Echoing Chandrasekhar, Finance Secretary Ashok Chawla said that to achieve double-digit growth agriculture will have to grow at four percent, industry at 12 percent and services at 10.5 percent.

“Investments should rise to 40 percent of GDP, for which savings rate will need to increase from 35 percent to 37-38 percent. The remaining 2-3 percent will come from external sources,” said Chawla.

Revenue secretary Sunil Mitra pointed out that the challenge is to broaden the tax base, moderate the rates, and simplify the norms.

“The Direct Tax Code (DTC) is a major step toward simplification of tax provisions. Direct tax reforms have resulted in direct tax rising from 2.9 percent of GDP in 2000 to 6.36 percent in 2009,” said Mitra.

According to Mitra, Goods & Services Tax (GST) once effective would will enhance the competitive edge of manufacturing and service companies and create a common market across the country.

The meeting was organised by the Confederation of Indian Industry (CII).