India to exit from fiscal stimulus next year; growth at 7 pc in FY11

Giving a clear signal that India will exit out of the fiscal stimulus package next year, Prime Minister Manmohan Singh today told the international community that India was better placed than any time in the past to push through reforms and invited foreign investors to take part in the country's prosperity with this growth reaching seven per cent next year.

''This performance in highly adverse circumstances indicates the resilience of our economy. It also vindicates to a large extent, the corrective action taken by the government to manage the downturn, like other countries we resorted to a significant stimulus and we will take appropriate action next year to wind this down. Our medium-term objective is to achieve a growth rate of nine per cent per annum,'' Dr Singh said in his address to the India Economic Summit here.

''Taking into account the fact that our domestic savings rate is now as high as 35 per cent of GDP, this is eminently a feasible target,'' he added.

The Prime Minister said India has been able to face the global economic downturn better than most of the countries of the world. The Indian economy grew at a respectable rate of 6.7 per cent in 2008-09. In the current financial year, the country was witness to inadequate monsoon and resultant slowdown in agriculture.

''Nevertheless, growth is expected to be at around 6.5 per cent (in FY10). There are clear signs of upturn in the economy. With a normal monsoon next year, we hope to achieve a growth rate of over seven per cent,'' he said.

Welcoming FDI in various sectors of the economy, Dr Singh also invited portfolio investment in equity in Indian companies by Qualified Institutional Investors.

The Prime Minister said India's policy will be guided by the desire to make the country even more attractive for Foreign Direct Investment (FDI).

''We are particularly keen to rationalise and simplify procedures so as to create an investor-friendly environment,'' he said.

-- (UNI) -- 08DI15.xml

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