New Delhi, May 31 (IANS) Union Finance Minister Pranab Mukherjee Thursday said the Indian economy was set to recover as most of the factors leading to the sharp drop in economic growth in 2011-12 had "bottomed out".
"Among the factors that have contributed to the slowdown are the tight monetary policy that led to a significant rise in the interest costs and the weak global sentiments that affected growth in domestic private investment," Mukherjee said while reacting on the economic growth data.
"The domestic investment sentiments may have been also affected by the environmental policy bottlenecks in the mining sector," he said.
As per the data released by the Central Statistics Office Thursday, India's economic growth slumped to 5.3 percent in January-March quarter, the slowest in nine years, due to poor performance of manufacturing and farm sectors.
For whole financial year 2011-12, the gross domestic product (GDP) growth slumped to 6.5 percent. This is the slowest pace of expansion in the country's economy since 2002-03, when it had registered a growth of 4 percent.
"Most of these factors have bottomed out. The rate cycle has been reversed; mining sector growth has turned around; progress has been made on fuel linkage for coal based power projects. There is a turnaround in the investment growth rate in the fourth quarter which had been negative in the preceding quarters of 2011-12," Mukherjee said in a statement.
Apart from these factors, the finance minister said a normal south-west monsoon has been predicted for 2012-13, which should lead to revival in GDP growth.
"There are no major adverse results on corporate performance in the last quarter of 2011-12. All these factors should help in the recovery of growth momentum," he said.
He said the government would take all necessary steps to address the imbalance on the fiscal front and on the current account.
"It would help in checking inflationary expectations and inspire confidence for improved capital flows as well as recovery in domestic investment growth," he said.