Additional reforms needed for double growth: Chidambaram
New Delhi, Feb 28: Pushing for reforms, Union Finance Minister P Chidambaram while tabling the Economic Survey in the Lok Sabha today suggested a slew of reform measures that alone could help raise growth to an ambitious double digit level. These include opening retail to FDI, hiking FDI in insurance to 49 per cent, allowing 100 per cent FDI in new private rural agricultural banks, selling up to 10 per cent equity of Navratna (cash-rich) PSUs.
The Economic Survey, considered to be an analytical report of the government, outlined several concerns like impact of US sub-prime crisis, loss of dynamism in agriculture, appreciating rupee eroding India's export competitiveness, deceleration in industrial growth and managing capital inflows. The Economic Survey said inflationary impact of foreign funds flow, a slowdown in the US, an appreciating rupee and sluggish infrastructure sector were major challenges before economy that is projected to slow down to 8.7 per cent in 2007-08.
"The new challenge is to maintain growth at these levels, not to speak of raising it further to double digit levels," the Survey, a report card on the economy, presented in Parliament on Thursday, said.
The Economic Survey said there is an urgent need for a regime that supports predictable user charges, a financial system that allocates risk efficiently.
The document stated that the recent hike in fuel prices would add 19 basis points to the inflation rate projected at 4.4 per cent for the year 2007-08.
"Of
late,
the
change
in
the
structure
of
the
economy
and
its
more
globalised
nature
has
made
management
of
inflation
a
complex
task," it
said,
adding
that
the
rising
capital
inflows
will
require
monetary
policy
to
play
a
more
decisive
role.