Fiscal Stimulus Package Not Needed Next Year

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Nov. 9 – Indian Prime Minister Manmohan Singh said on Sunday that the government would withdraw the fiscal stimulus next year but still pursue reforms needed to push for economic growth.

He was quoted by The Times of India as saying during the inaugural of the India Economic Summit: “Growth is expected to be around 6.5 percent. There are clearly signs of an upturn in the economy. With a normal monsoon next year, we hope to achieve a growth rate of over 7 percent.”

Mr. Singh said reforms would be necessary including insurance that would require legislative changes. “We will strive to build political consensus needed for these legislative actions to be completed,” he said, adding that an improved financial system would help fund infrastructure.

“The crisis has disrupted economies everywhere… We have avoided a collapse on the scale of the Great Depression. The worst is behind us though the path to global recovery will be long and uncertain,” he said. “Our medium term objective is to achieve a growth rate of 9 percent per annum.”

India wants to increase overall investment in vital infrastructure namely power, roads, ports, airports, telecommunications, irrigation and urban infrastructure. These projects will need funding the public and private sector. “Our foreign direct investment policy has been greatly liberalized. Our policy will be guided by the desire to make India even more attractive for foreign direct investment,” he said. Singh said India’s policy would be  aimed at attracting more FDI and simplify procedures for an investor friendly environment.

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