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'Domestic demand will drive Indianeconomy despite global slowdown'PTI Jan 29, 2009, 01.05am IST

DAVOS: India's domestic demand will help sustain economic growth amid global downturn, which has not hitthe country as much as it has impacted other economies, commerce and industry minister Kamal Nath said.

"India's growth story is based on domestic demand. It is not based on the export market entirely...We cancontinue to keep our domestic demanddriven growth," Mr Nath said in an interview.

India's exports worth around $200 billion contribute about 20% to its domestic production. The economy,which grew by over 9% in the last three financial years in a row, has shown signs of weakness in the currentfiscal. The Reserve Bank of India has lowered the growth projection to 7% for 200809 in the wake ofslowdown in the world economy.

"We cannot insulate or isolate ourselves from it (global downturn) but we can continue to keep our domesticdemand," he said.

He said the Central government has announced $4 billion for infrastructure projects, which would take off inthe next couple of months.

"That is creating domestic demand...And that is what is going to sustain (us) through. We are not going toget hit as (badly) as other countries," Mr Nath said.

Asked whether the two stimulus packages announced by the government are adequate to stem the impactof the meltdown, he said, different industry segments are showing signs of picking up.

"I had meetings with industry. They said in the last 15 days they have seen a pickup...They are seeingthings brighten up...Of course they want more," he added.

Mr Nath said government expenditure is bound to increase, leaving a wide fiscal gap. "Our fiscal deficit isgoing to increase but I think it will be manageable," he said.

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