“The next government will have to take forward the fiscal consolidation process. “When we talk about what is the real growth potential of the country, especially when we talk about having grown over 9 per cent some time ago, I can see there were other factors and some overheating at play as well earlier... the long term growth potential can easily be around 7.5 per cent,” Ahluwalia said. Hoping that the electorate would “vote sensibly” in the upcoming Lok Sabha elections, he also emphasized that there should be continued focus on infrastructure development and investments. “Whatever government comes to power I am sure that the reform process would continue, although priorities about sectors and areas may change,” Ahluwalia said.
According to him, a lot is being done to reduce liquidity mismatch, a problem which if overlooked could likely make it difficult for banks to do business. “From India’s point of view, we are not counting too much on bank credit and we are instead counting on foreign direct investments,” he stated. Further, Ahluwalia said that emerging markets would need to focus more on FDI and bonds among other measures to make up for the fall in bank credit. Meanwhile, at the session ‘Economic Outlook for Asian Emerging Markets - Opportunities, Challenges and Risks’, IMF’s Deputy Managing Director Min Zhu said emerging market economies have shown strong progress in the last decade, but potential growth rate has come down from the previous 10 years. (PTI)