India's economy is set to grow 7.5 percent in the year to March, 2006, and Asia's third largest economy should see that rising to 10 percent in 2-3 years, Prime Minister Manmohan Singh said on Tuesday.
"Our economy has been growing at an unprecedented rate ... and we are likely to grow by about 7.5 percent this year," Singh told a business conference.
But India faced an infrastructure deficit and the government would plough 1,700 billion rupees ($37 billion) over the next 7 years into developing the road network which in many areas is unpaved and riddled with potholes, he added.
"I am certain that we are at the take-off point in infrastructure," Singh said.
Another key area targetted for reform by the communist-backed coalition government led by Singh's Congress Party is labour laws. Employers and economists say increased flexibility in hiring and firing is vital, but Singh's communist allies are resisting changes they say will hurt workers.
"We will try for a consensus on making labour markets more flexible while having credible social safety nets," said Singh, who as finance minister in the early 1990s kick-started economic reform in the world's second most populous nation. India needs to create at least 10 million jobs a year to provide work for its young and increasingly educated workforce.
Singh said India's foreign direct investment regime was one of the world's most liberal and ministers were working on cutting red tape, which he admitted slowed down business.
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