Stimulus to end in 2010: PM
Nov. 8: The Prime Minister, Dr Manmohan Singh, on Sunday said that India will wind up the fiscal stimulus in 2010 but promised reforms in the financial sector to make funds available for the industry.
"Like other countries, we resorted to a significant stimulus and we will take appropriate action next year to wind this down," Dr Singh said in his address at the 25th India Economic Summit.
The Prime Minister said that the GDP will grow by 6.5 per cent this fiscal and seven per cent next year if the monsoon is normal. Dr Singh said that the worst is behind us, though the path to global recovery will be long and presently somewhat uncertain. "Our strategy must aim at sustaining a high rate of growth on the strength of strong domestic demand. We seek to achieve this through a large increase in investment in infrastructure," said Dr Singh.
He said that the government is keen to rationalise and simplify the FDI procedures so as to create an investor friendly environment. "Our policy will be guided by the desire to make India even more attractive for FDIs," said Dr Singh.
With the Cabinet clearing greater disinvestment in PSUs, the Prime Minister said that he now hopes "to see faster progress in sale of a portion of government shareholding in the domestic market and issue of fresh equities in respect of the selected companies in the public sector." He said that there is a need to develop long-term debt markets and to deepen the corporate bond markets.
"This in turn calls for a strong insurance and pension sub-sectors. Some of the reforms needed, especially in insurance, involve legislative changes," said Dr Singh. He added that his government will strive to build the political consensus needed for these legislative actions to be completed. "We need to improve the futures markets for better price discovery and regulation. We also need to remove institutional hurdles to facilitate better intermediation," he added.
Dr Singh was confident that all these issues will be addressed through gradual but steady progress in financial sector reforms to make the sector more competitive while ensuring an efficient regulatory and oversight system. "We are also better placed now than any time in the recent past to push the reform process forward," the Prime Minister added.
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