July 3, 2009

Report says 7 percent growth possible

An Indian finance ministry economic report says the economy can achieve a 7 percent or more growth rate this fiscal year with proper reforms.

The recommendations in the economic survey report, which comes out prior to the presentation of the annual budget that is due Monday, called for major policy changes including foreign investment in multi-brand retail, extending factory work hours and allowing participation by foreign institutions in higher education, the Hindustan Times reported.

In forecasting a 7 percent growth rate, the survey called for abolishing the fringe benefit tax, surcharges and other levies. It also called for reforms in various subsidies including those for energy and fertilizers.

Growth so far this year has come below 7 percent, partly because of the global financial crisis, compared to more than 8 percent in recent years.

The survey found India could enjoy a new trend of high growth.

It is therefore imperative that the government revisit the agenda for pending economic reforms in the first instance with a view to renew the growth momentum, it said.

The economic survey which focuses on reforms is a positive move as financial sector reforms are crucial and they have to be done despite the global crisis, Rajiv Kumar, director of the Indian Council for Research on International Economic Relations, told Hindustan Times.