New Delhi: Union government will continue reforms to bring the country back to a higher growth trajectory of at least 9% at the earliest and encourage state-run firms to sell stakes through public offerings, the finance minister Pranab Mukherjee said.
Asia’s third largest economy was hit hard by the global crisis and expanded by 6.7% in 2008-09 (April-March), its slowest pace in six years and much lower than growth rates of 9% or more recorded in the previous three fiscal years.
A government survey last month said India needed to make sweeping reforms including removal of fuel subsidies, and speed up infrastructure development to attain 7% growth in 2009-10.
“...it should be clear that the process of economic reforms that began in the early 1990s will continue in right earnest so that the economy is back on the path of 9% plus growth at the earliest,” Pranab told industrialists on Monday.
A copy of his speech was released on Tuesday by the finance ministry.
Recent data have shown incipient signs of an economic recovery - manufacturing activity held steady in July and new orders index rose to its highest in nine months.
Industrial output grew for a second successive month in May, while infrastructure output grew 6.5% in June, its fastest pace in 18 months.
The government would encourage and extend support to the export sector, he said.
Exports fell 27.7% in June, its ninth straight monthly fall, as recessions in developed markets slashed demand for Indian goods.
Since December, the government has cut tax rates and stepped up spending to revive growth in a slowing economy. However, the fiscal stimuli would widen the fiscal deficit to 6.8% of GDP in fiscal 2009-10.
The government has resorted to fund this 16-year high deficit through a record borrowing of Rs4.51 trillion ($95 billion), which analysts fear could adversely impact private borrowers.
However, Pranab said the borrowing programme would be carried out in a “non disruptive manner” that would not crowd out private sector investment.“
He also said the government would sell small stakes in state-run firms through public offerings and government holding would not fall below 51%.
He said the government was determined to get back to fiscal consolidation at the earliest. The government has said it aims to cut the fiscal deficit to 5.5% of GDP by the end of 2010-11, and further to 4% in 2011-12.