Indian Prime Minister Manmohan Singh used his Independence Day speech on Wednesday to promise to improve conditions for foreign investment in the country after a sharp downturn in economic growth.
India recorded near double-digit expansion over much of the last decade but the economy grew by just 5.3 percent in the January-March quarter, a rate that threatens to stall its transformation since the early 1990s.
Singh said that the government would “leave no stone unturned to encourage investment in our country”, and vowed to increase spending on much-needed infrastructure projects such as roads, railways and the electricity network.
“To attract foreign capital, we will have to create confidence at the international level that there are no barriers to investment in India,” Singh said, in a signal that further liberalization reforms were in the pipeline.
Foreign companies keen to tap into India’s emerging consumer society have poured into India, but have often struggled to thrive amid government policy U-turns, endemic corruption and bewildering red tape.
The ruling Congress party is already concerned about general elections due in 2014, and the prime minister has launched a campaign to revive its flagging fortunes since P. Chidambaram was named finance minister two weeks ago.
Singh, delivering the traditional Independence Day address at the Red Fort in Delhi, said that the world economy was “passing through a difficult phase”, which had merged with India’s domestic situation to hinder growth.
“We cannot do much about the conditions that prevail outside our country,” he said. “But we must make every effort to resolve the problems inside our country so that our economic growth [is]… again speeded up.”
He added that growth must be obtained while controlling inflation, which is likely to be stoked by a poor monsoon this year — though the inflation rate unexpectedly dropped to 6.87 percent in July from 7.25 percent in June.
Singh, 79, who is expected to step down before the elections, repeated his forecast that annual GDP growth would exceed last year’s rate of 6.5 percent, a prediction dismissed by opposition leaders and some independent economists.