New Delhi, Feb 15 : Prime Minister Dr. Manmohan Singh today exuded confidence that the domestic economy will grow at 9 per cent this year and inflation can be contained at an acceptable level.
Addressing the annual session of the Federation of Indian Chambers of Commerce and Industry (FICCI), Dr. Singh said that our economy is mainly driven by domestic factors, particularly improved investment, demand and consumption.
"On one hand, our economy is sticking along smoothly having registered a growth rate of 9.6 per cent last year and likely to touch almost 9 percent this year. On the other hand, there are clouds on the horizon with distinct possibilities of the global economy, particularly the developed world facing a downturn in the coming year to some extent," he added.
Highlighting the strong fundamentals of the economy, Dr. Singh said that the savings rate in the country has touched almost 35 per cent of Gross Domestic Product (GDP) and the investment rate is at an all time peak of over 36 per cent of the GDP.
Dr. Singh said that the capital formation in both public and private sector is touching new peaks and the inward Foreign Direct Investment (FDI) had crossed 20 billion dollars last year.
While acknowledging the major role of domestic factors in the country's growth story, he admitted that the economy might react to the slowdown elsewhere in the world but assured the investors saying that government would take steps to limit their impact.
To help step up growth and at the same time make growth more inclusive, Dr. Singh would like to emphasize four key aspects of policy framework, such as agriculture and rural development, infrastructure, education, health care and railways.
For railways, Dr. Singh said: "We have set up new mechanisms for attracting private investment in railways. Many private firms are already running container trains. Soon, we will have private investment in logistics parks, railway stations and in coach production."
Dr. Singh further said that the National Highway Programme has been greatly expanded over four years.
"We now have a robust framework of Model Concession Agreements for BOT road contracts and a viability gap funding system in place. The planned investment of over Rs 220,000 crores in roads over the next five years will be a major boost to our infrastructure - and of course, to our automobile sector," he said.
He further added that the power sector is seeing a major expansion and private participation in power generation has revived, particularly after the Ultra Mega Power Projects were launched.
Speaking on the education and healthcare, which are the two other areas, which have been given primacy, he said: "The share of the expenditure on education in the Central Gross Budgetary Support is going up from 7.68 per cent in the 10th Plan to over 19 per cent in the 11th Plan."
The Prime Minister said that all these initiatives should have a positive impact on the growth process and make it more inclusive.