New Delhi: High interest rates, coupled with adverse global situation, are impacting investment and economic growth, Finance Minister Pranab Mukherjee said on Tuesday.
In a globalised world where major developed economies are going through a turbulent time, growth cannot be taken for granted, the Finance Minister said at the Assocham annual general meeting here. However, the slowdown should be a temporary phenomenon, he said.
"This continuing global uncertainty is also affecting India...(besides) A tight monetary policy has impacted investment and consumption growth through higher cost of credit. Growth has consequently slowed," he said.
The 2011-12 economic growth is estimated to slip to a three-year low of 6.9 per cent from 8.4 per cent a year ago.
The Reserve Bank has increased the interest rates by 375 basis points since March 2010 to tame rising inflation.
Mukherjee appeared confident that the country would be able to sail through tough times and get back on the high growth path.
"I expect this slowdown to be temporary and the economy would soon revert to the high growth trajectory," he said adding "India has to target a double digit growth in the not too distant future. We have shown that we can grow fast but we must learn to sustain it over extended period of time".
The Finance Minister is expected to announce steps to boost growth in the budget for 2012-13 on March 16 in the Lok Sabha.
India was growing at over 9 per cent before the global financial crisis of 2008 pulled down its growth rate to 6.7 per cent in 2008-09.
On opening up the retail sector, the Finance Minister, said, "We have liberalised FDI in single brand retail and a consensus for operationalise the decision on opening FDI in multi-brand retail is being pursued."
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