India needs $500bn for core sector in next five years: PM

MUSCAT (OMAN): India needs over $500billion in investments over the next five years for infrastructure development, Prime Minister Manmohan Singh
said on Sunday.

"India is undergoing a major transformation. Our economy is expanding rapidly," Singh said at a gathering of the Indian diaspora in Oman at the Indian embassy.

"We are laying particular focus on the development of our agriculture and the rural areas. Our financing requirements for the building of massive infrastructure in the next five years are estimated at over $500billion," he said.

The Prime Minister said that with new opportunities for youth emerging every day, the government has embarked on the "largest education, social welfare, skill development and employment generation programmes in the history of our country".

Regarding the current global financial crisis, Singh said India's growth rate might come down somewhat in the next five years.

"However, we still hope to achieve a growth rate of seven to seven and a half percent next year. The fundamentals of the Indian economy are very strong," he said.

"Our banking system and financial institutions are well capitalised and their depositors are wholly secure. I have constituted a high-level committee to monitor the evolving global situation and suggest short-term and long-term measure to use this opportunity to further accelerate our growth," he added.

Earlier in the day, speaking at a gathering of Indian and Omani businessmen here, Singh said India's young demographic profile would help its economy.

"Our domestic savings rate is 35 per cent of our GDP and our investment rate is 37 per cent of our GDP," he stressed.

"Our young demographic profile will lead to a further increase in these rates of savings and investment over the coming years," he said.

Courtesy : Times

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Economy will rebound in 6 to 9 months, says Chidambaram

The financial meltdown will not spare any sector of the economy, but on the brighter side recovery could be just six to nine months away, Finance Minister P Chidambaram has said.

"There will be some slowdown in every sector... But monetary measures, counter-cyclical measures and enlightened measures by the companies themselves can get over this painful period of adjustments and in about 6-9 months we should be back to the growth rate," he told a TV channel in an interview.

India has been growing by 9 per cent and above for four straight years, but various estimates suggest that the impact of the economic crisis could shave off anywhere between 1 to 2 percentage points.

"We are not revising it (GDP forecast) upwards or downwards. It could be anywhere between 7-8 per cent... The only other large country recording such growth will be China," Chidambaram said.

Commenting on the decline in inflation to single digit – 8.98 per cent – after five months, he said, "I don't think we should get too excited about the single digit inflation as it is still close to 9 per cent, much above our tolerance level...

"We would like the inflation to come down. We hope it will happen in the next few weeks, so I think we are jumping the gun when we are talking about a rate cut." As regards the impact of slowdown on India Inc, he said, "Bottom lines in the profit and loss account will indeed be affected but it doesn't mean that something dramatic has happened in the Indian economy."

Stressing that India is still an attractive destination for foreign investors, he said the country's policy stance has attracted significant foreign direct investment as well as portfolio investment in the last four years.

Courtesy : BT

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