The Hindu Business Line : Chidambaram prescribes reforms for higher GDP growth

NEW DELHI: Buoyed by the 8.4 per cent economic growth in 2005-06, the Finance Minister, Mr P. Chidambaram on Wednesday said more structural, legal and administrative reforms would be needed, particularly in mining and electricity sectors, to sustain the higher growth rate.

Though 'satisfied' with the overall growth rate, he asserted that hurdles in attracting FDI should be removed.

"My information is that lot of foreign capital is moving to India and that includes Foreign Institutional Investors... We will continue to attract FIIs. Also we need to attract FDI, which is not a substitute for FIIs, but in addition to FIIs. Temporary n et sales by FIIs do not mean that there was outflow of foreign capital."

He told reporters that he did not expect the high oil prices to impact the growth momentum, saying, "if global oil prices are reflected in domestic prices, it will impact inflation, but there is no reason why it should affect growth rate as long as produ ctive sectors absorb increasing costs and still sell goods.

"In short, medium and long terms, the country requires larger capital investment, which was only possible if reforms continue at steady pace in every sector. Foreign capital goes to that country where government carried out structural reforms, legal refo rms and administrative reforms and that is the road we have taken so far."

Mr Chidambaram said he would be meeting the Prime Minister, Dr Manmohan Singh along with Ministers concerned to flag the problems in mining and electricity sectors, whose performance has been disappointing. The mining sector grew by a mere 0.90 per cent in 2005-06 as against 5.8 per cent in the previous year. - PTI

Prev: Mukesh Ambani group in talks with Neotia for retail entry
Next: GDP growth up 8.4 pc in 2005-06

Business Line | NUS Index |

In Focus

Infrastructure woes stare IT sector

Gold scaling new highs

In Depth

Tax Talk