Action to roll back stimulus next year: PM

Within days of his government’s decision to disinvest 10% of profit-making PSUs, prime minister Manmohan Singh has expressed hope that there would be faster progress in the sale of a portion of government shareholding in the domestic market and issue of fresh equities with respect to select companies. Next, the government will strive for political consensus on several financial sector reforms, the prime minister (PM) has indicated.
Setting at rest speculation on the withdrawal of the economic stimulus package, the PM has said appropriate action would be taken next year to wind it down. Reiterating that India has faced the global downturn better than most other countries, Singh has pointed at the resilience of the country’s economy.

Delivering the keynote address at the India Economic Summit, hosted by the World Economic Forum and the Confederation of Indian Industries  in New Delhi on Sunday, the PM spoke on economic growth, infrastructure thrust, improving the foreign investment climate, social sector and financial reforms, strengthening the debt and bond markets, climate change and terrorism.  

Pinning his hopes on a normal monsoon, Singh has projected an economic growth rate of 7% for the next financial year. This year is expected to end with a growth rate of 6.5% or a little more, as against 6.7% in 2008-09. “Our medium term objective is to achieve a growth rate of 9% per annum,” he said, adding that this is a feasible target taking into account the current domestic savings rate of 35% of the GDP.

Drawing a roadmap for attaining the target growth level, the PM underscored the significance of higher investment in infrastructure — power, roads, ports, airports, telecom, irrigation and urban development.

Pointing out that FDI inflow has touched $121 billion since 2001-02, Singh argued that “this is not a large number given the scale of our economy”. Although India is considered to be among the most attractive locations for FDI, Singh spoke about making the country an even more attractive destination for foreign investment, including portfolio investment.
The government is keen to rationalise and simplify the procedures, so as to create an investor-friendly environment, the PM said. But, commerce and industry minister Anand Sharma, in a subsequent session, said that there are no plans to change the sectoral limits for FDI. He said simplification of procedures is an ongoing process.

Touching upon the subject of financial reforms, Singh elaborated on the need for developing long-term debt markets and deepening the corporate bond markets. He also said that “we need to improve the futures market for better price discovery and regulation”. Drawing the audience’s attention to the strong insurance and pension sub-sectors, he pointed out that the government will strive to build political consensus needed for legislative changes in implementing key financial reforms.

Projecting a sunny outlook for the country, the PM concluded that “India looks to the future with confidence”. He said that in the coming months and years, “I hope to see a decisive change in the pace of our progress to become a leading economy in the world”.