The Prime Minister, Dr Manmohan Singh, said on Friday that the government will move ahead with reforms in the labour and the financial sector but needs to increase investment in rural education, health and infrastructure to raise the GDP to over nine per cent.
“We need to push forward the reforms process. This has many dimensions. Increased investment in rural infrastructure, more emphasis on health and education is probably of the greatest importance,” said Dr Singh.
He said the fact that India’s savings rate is as high as 35 per cent of GDP suggests that “what I am saying, is a realisable goal.” The Prime Minister said that the primary challenge in the next decade will be to sustain high rates of economic growth and to ensure that the growth process remains equitable.
Dr Singh said that India cannot be built from Delhi alone. “No doubt, the Union government has an important developmental role, apart from its central role in providing national security. But with the growth of the market economy and with individual talent and enterprise being unleashed, no agenda for building a new India can any longer be imposed from Delhi. India lives in the States,” said Dr Singh.
India is one of first few countries in the world to tighten the accommodative monetary policy adopted to stimulate the economy.
The finance minister, Mr Pranab Mukherjee, however, said he would take a call on exiting from fiscal stimulus after reviewing the economic growth in the second and third quarters of this financial year.
“So far as we are concerned, I think I shall have to watch situation for the economic progress in the second quarter and third quarter,” Mr Mukherjee said. “I am going to share my perception on what should be the exit policy in G-20 Finance Ministers meeting, next Saturday.”
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