PM says hard decisions needed for 9 pct growth

NEW DELHI Sat Aug 20, 2011 11:09pm IST

India's Prime Minister Manmohan Singh speaks during the inauguration ceremony of the newly constructed Terminal 3 at Indira Gandhi International Airport in New Delhi July 3, 2010. REUTERS/B Mathur/Files

India's Prime Minister Manmohan Singh speaks during the inauguration ceremony of the newly constructed Terminal 3 at Indira Gandhi International Airport in New Delhi July 3, 2010.

Credit: Reuters/B Mathur/Files

Related Topics

Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

NEW DELHI (Reuters) - India needs to take "difficult" decisions to achieve 9 percent economic growth, but a lack of national consensus is making it tough to push through economic reforms, Prime Minister Manmohan Singh said on Saturday.

Singh, who as a finance minister in 1991 opened up the Indian economy, met members of the Planning Commission at a time when India's growth story is passing through a not-very-happy chapter.

Analysts have warned lack of structural reforms are holding back the country's economic growth and could weigh down future expansion.

"Given the uncertainties in the global economy, and the challenges in the domestic economy even a 9 percent target is feasible only if we can take some difficult decisions," Singh told members of India's top economic planning body.

India's economy, which grew by 8.5 percent in the last fiscal year that ended in March, is showing unmistakable signs of slowdown on high inflation, rising cost of capital and mounting uncertainties in global economy.

In July, manufacturing activity expanded at its weakest pace in 20 months, while car sales contracted for the first time in nearly three years.

Although policymakers are projecting an annual economic expansion of at least 8 percent in the current fiscal year, private economists are predicting the growth rate to dip below that.

While domestic policy uncertainty amid a slew of corruption scandals is seen preventing firms from adding capacity, 11 rate hikes by the central bank to control inflation is hurting consumer demand.

Analysts suggest speeding up pending policy reforms as a prescription for boosting investment that could add capacity and ease bottlenecks that drive inflation and crimp growth.

Political wrangling within the ruling Congress-led coalition and resistance from the main opposition Bharatiya Janata Party have stuck several key reforms, including implementation of a nationwide goods and services tax and liberalising foreign investment in retail and financial sectors.

"Second generation reforms are essential. But they are also lot more difficult and require a broad-based national consensus," Singh later told reporters.

"The effort has to be to create a climate of opinion whereby all political parties would unite in national interest to push forward the reform agenda."

The second generation reforms are meant to further open up the financial sector for foreign investments and make stringent labour and land acquisition laws investor friendly.

(Additional reporting by Nigam Prusty; editing by James Jukwey)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see
Comments (1)
Saini23 wrote:
I feel there is still opportunity for congress/UPA to share a small slice of credit for passing and implementation of effective and result oriented ‘Lokpal Bill’ if it falls in line with the so long undersurface desire of Indian public which has exploded behind Anna Hazare team for its selfless intention for it. Govt. shedding its ego must be able seem be doing the needful at war footing to gain the faith of public. It must learn that it can no more befool present day youth which is future of nation and is standing behind the cause of eradication of corruption as solid unbreakable rock!

Aug 21, 2011 4:49pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared


Boat Tragedy

Boat Tragedy

Boy and girl on Korean ferry tied life jackets together before they drowned.  Full Article 

Big Buyback

Big Buyback

Apple expands buybacks by $30 billion.  Full Article 

Put A Ring On It

Put A Ring On It

Actress Jodie Foster marries girlfriend Alexandra Hedison.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Champions League

Champions League

Benzema strike gives Real Madrid edge over holders Bayern Munich.  Full Article 

Most Beautiful

Most Beautiful

Lupita Nyong'o is named the world's most beautiful person by People magazine.  Slideshow 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage