Prime Minister Manmohan Singh said on Saturday he expected India to log 7.5 percent GDP growth annually over the next decade, as the country entered a new phase of economic expansion. Singh, who launched wide-ranging economic reforms 14 years ago, promised to provide an investor-friendly environment saying his immediate challenge was to step up investment and foster capital formation in the farm and rural sector.
"I do believe that our next generation can aspire to see India emerge as the world's second-largest economy, if not the first," Singh told a meeting of industrialists and trade experts who advise the government on economic issues.
The government expects GDP growth close to seven percent this year but economic thinktanks and analysts say growth could be lower due to delayed monsoon rains - a key influence on economic growth.
Singh, who was sworn in as prime minister in May, said his government would pursue its efforts to make the domestic economy more competitive and improving the country's infrastructure.
Although India is one of the fastest growing economies in the world, higher growth is hobbled by creaking infrastructure including poor roads, clogged ports and an ageing rail network.
Singh, an economist-turned-politician, said his government had taken several steps to improve regional security and urged all political parties to conduct themselves with responsibility to boost the positive atmosphere.
"No one now talks of South Asia as a nuclear flashpoint and no travel advisories are being issued apprehending war," Singh said.
"There has been an improvement in the security environment in Jammu and Kashmir and in the north-eastern states. Tourists arrivals into India are increasing and the number of flights into India are increasing and our airports are clogged with traffic."
But Singh identified the inflation rate as one of the concerns in an otherwise upbeat assessment of the Indian economy and said the inflationary pressures were almost entirely due to the spurt in global oil prices.
"By and large our track record in inflation management has been impeccable and I have already stated that holding the price line is a priority for our government," said Singh.
India's closely tracked wholesale price inflation remained unchanged at 7.34 percent in the year through November 20, as lower fuel prices offset higher prices for primary articles such as farm produce and minerals.
Wholesale price inflation has shot up from annual rate of 4.32 percent in April data to 8.74 percent by August, the highest since February 2001, leading the central bank to raise short term interest rates.