Prime Minister Manmohan Singh promised the Confederation of Indian Industry more economic reforms on top of earlier steps to open up sectors including retail and aviation to foreign investment and ease India’s infamous red tape.
The Congress-led government is accelerating implementation of long-stalled power, road, railway and other infrastructure projects to remove stumbling blocks to growth, Singh said.
“We grew at an average of about eight percent in the last 10 years and we can get there again,” he said in a wide-ranging speech to business chiefs in New Delhi.
The current annual growth rate is five percent and the government is struggling to jumpstart the economy before it faces voters in 2014 polls.
It is also seeking to get the business community on side after its vocal criticism of years of policy paralysis and scandals.
Singh appealed to industrialists to “keep the faith and partner with government” to return India to stronger growth.
India’s economy has been stumbling, with industrial production slowing sharply — highlighted by monthly car sales in February which plunged by 26 percent year-on-year, the lowest pace of growth in 12 years.
India is taking steps to reduce its budget deficit and improve its overall government finances, whose stretched state has triggered warnings from global ratings agencies of a possible credit rating downgrade, he said.
But Singh warned that the current account deficit — the broadest measure of trade representing the gap between the inflow and outflow of foreign currency — would be “higher than normal for the next few years” due to weak export markets.
The current account deficit was likely to be 5.0 percent of gross domestic product for the current year, “twice the traditional comfort level”, he noted.
“I believe a well-managed Indian economy, seen to be back on a high-growth path, can attract continuing capital flows,” he said.