NEW DELHI, July 19 (UPI) -- Prime Minister Manmohan Singh said Friday the Indian economy is going through a difficult period but urged business leaders to avoid negative sentiments.
Speaking at the annual session of the Associated Chambers of Commerce and Industry of India, Singh said it may not be possible to achieve a 6.5 percent growth rate set in February in the current fiscal year, which began in April
Calling for optimism, Singh said: "The basic fundamentals of our economy are sound and healthy. We have been taking all possible measures to correct imbalances on the macro front," the government website reported.
Singh, whose Congress Party heads the coalition government, spoke about the current account deficit, the rupee plunging to record lows against the U.S. dollar, fiscal deficits and the slowing economy.
He said his government is taking all steps to boost investments to spur the economy.
Singh said he "would not like to make a forecast" of growth this year, noting the International Monetary Front recently reduced its earlier projection of growth for all countries including India.
"We had targeted 6.5 percent growth at the time the budget was presented [in February]. But it looks as if it will be lower than that," Singh said.
The prime minister said the economy should turn around from the decade-low 5 percent growth of last year because of good agricultural performance and the impact of various actions taken relating to infrastructure.
He blamed the volatility of the Indian rupee both on global markets reacting to the likelihood of the U.S. Federal Reserve tapering its monetary policy, and on India's current account deficit, which increased to 4.7 percent of the gross domestic product in the last fiscal year.
Singh said his government is committed to bringing the CDA under control by addressing both the demand and the supply side of the problem, such as reducing the demand for gold and petroleum products and pushing exports on the supply side,
"Ideally we should bring the current account deficit down to 2.5 percent of our GDP. It is clearly not possible to do this in one year, but I expect that the current account deficit in 2013-14 will be much lower than the 4.7 percent level recorded last year," he said.
Singh said his government is "determined" to meet the Finance Ministry's fiscal deficit target of 4.8 percent of GDP this year.
The government this week announced further liberalization in foreign direct investments and the prime minister said more reforms were on the anvil.