PM pushes for reforms, says will exit stimulus

Prime Minister Manmohan Singh, who as finance minister in the 90s initiated liberalisation, today said his government would steadily pursue reforms to feed economic growth, while withdrawing the fiscal stimulus by next year.

"Growth is expected to be around 6.5 per cent (this fiscal). There are clearly signs of an upturn in the economy. With a normal monsoon next year, we hope to achieve a growth rate of over 7 per cent," he said addressing the inaugural of the India Economic Summit organised by WEF and CII here.

For this growth to happen, Singh said reforms were essential, including in insurance that require legislative changes.

"(We) will strive to build political consensus needed for these legislative actions to be completed," he said, adding that a reformed financial system would help provide the finances needed for the country's development, especially for infrastructure.

He said the current economic showing indicated the resilience of the country and also "vindicates... the corrective action taken by the government to manage the (impact of the global economic) downturn - like other countries we resorted to a significant stimulus and we will take appropriate action next year to wind this down."

Singh said while the integration of the Indian economy with the rest of the world undoubtedly created new opportunities, the effects of the financial crisis was a challenge thrown up by the same trend.

"The crisis has disrupted economies everywhere... We have avoided a collapse on the scale of the Great Depression. The worst is behind us though the path to global recovery will be long and uncertain," he said.

The country had introduced fiscal stimulus by way of excise duty cuts last year to insulate the economy from the global crisis.

"Our medium term objective is to achieve a growth rate of 9 per cent per annum," Singh said, adding that the fact that India's domestic savings rate is now as high as 35 per cent of GDP, the target is eminently feasible.

He said the country had plans for a large increase in investment in all key infrastructure sectors: Power, roads, ports, airports, telecommunications, irrigation and urban infrastructure.

While some of this investment will be through the public sector, private investment too would play a large role in achieving this target, he said, welcoming foreign investors to park their money in the country.

"Our Foreign Direct Investment policy has been greatly liberalized. Our policy will be guided by the desire to make India...