Indian Prime Minister Manmohan Singh has said the economic "gloom and doom" clouding the country in recent years has been dispelled and that he is determined to push ahead with further reforms. In a speech on Saturday evening in Mumbai, Singh said that in 2006, 10 percent annual growth looked "eminently achievable" and "the sense of optimism was all pervading".
But he admitted that since then, Indian exports have shrunk and the fiscal deficit has gone up.
"Growth decelerated to 6.5 percent last year and may be only around six percent in the current year," he said. "This has dampened investor sentiment. "Doubts are being raised in some quarters about the India growth story going astray," he said at a corporate function organised by The Economic Times. Singh vowed that a raft of reforms announced in September would revive the economy and attract foreign investment, with more policy changes in the pipeline.
"We have dispelled gloom and doom, improved the climate for foreign investment (and) are working hard to restore investor confidence and the growth environment," Singh told business leaders in Mumbai, India''s financial capital.
In a strongly-worded speech, Singh said that his government "bit the bullet" when introducing recent reforms, including to the retail sector that will allow global chains such as Walmart and Tesco to open branches in India for the first time.
The move has attracted fierce opposition, and many Indian states may still act to keep out giant supermarkets to protect small shop owners.
"Some of the steps were considered by many of our critics as politically impossible. We bit the bullet and did what we felt was the right thing to do," Singh said. "Undoubtedly, more needs to be done." The reforms have already cost the ruling coalition its majority with the exit of an allied party that has threatened to bring a no-confidence motion against the government when parliament reopens later this month.
The Congress-led government has suffered a difficult second term in power amid policy paralysis, worsening economic data and corruption allegations, and is looking to revive its fortunes with the next general elections due in 2014.
"We can, and we must, correct our own weaknesses, and create new opportunities for economic growth and employment," Singh said, pointing to recent lowering of fuel subsidies as one move to tackle the fiscal deficit.
He promised imminent changes to tax avoidance rules to address "very negative reaction from investors", and said infrastructure projects would be given rapid clearances to end one of the biggest drags on growth.
Singh also pledged action to meet soaring energy demands, crack down on middle-men and graft, and bring in a long-awaited Goods and Service Tax that would replace a thicket of state and central taxes. The prime minister said India had experienced a "revolution of rising expectations" that had "unleashed new energies in our society and... fostered an atmosphere of great impatience and cynicism".
Critics say that his reform package was only the start of work needed to continue India''s transformation over the last 20 years, and that Singh, 80, has proved too weak to drive through his legislative programme.