— Photo: S. Subramanium

GOALS SET: Prime Minister Manmohan Singh addresses 12th Business Roundtable Meeting organised by The Economist in New Delhi on Tuesday. Editor-in-Chief of The Economist John Micklethwait is at left.

NEW DELHI: Prime Minister Manmohan Singh on Tuesday invited more foreign investment in the infrastructure sector, which was in need of over $300 billion in funding. He assured global businessmen that India was committed to fiscal consolidation, and would provide a conducive environment to absorb such massive inflows.

Addressing the 12th Business Roundtable Meeting organised by The Economist here, Dr. Singh, however, conceded that more reforms were required in banking and financial services for mobilising the underlying potential of savings and resources more efficiently.

"We are committed to fiscal consolidation. We have set goals for eliminating revenue deficit. We will bring the fiscal deficit to levels set in the Fiscal Responsibility and Budget Management Act."

Enabling environment

Declaring that a more enabling environment would be created to attract global investments for strengthening infrastructure, Dr. Singh said, "We have seen, and expect to further see, a massive increase in investment. The institutional architecture for sustaining a high level of investment in infrastructure has been put in place."

These initiatives had started yielding results and, to some extent, increased the level of investment in infrastructure, which had been a driver of growth as well as demand.

On banking sector reforms, Dr. Singh said, "There are still areas where we need to do more in the immediate future if we are to sustain our growth momentum. We need a further deepening and widening through a reform of our banking and financial system."

In fact, there was a need for a vibrant long-term debt market for public utility services to tide over the constraint on resources.

He advised global investors not to be apprehensive about India's labour laws; 90 per cent of the workforce was in the "unorganised" sector, which was not constrained by the "unwieldy" rules and regulations.

"The labour markets too, need to be made more efficient, although I often feel that this problem is overemphasised."

The social sector was another area where reforms were essential.

"We also need to improve the quality of governance and public service delivery mechanisms, particularly in the social sector."

India's macro economic authorities had taken and would take whatever steps were required to ensure the sustainability and stability of the growth process.

"Many analysts believe that our economy has moved on to a new growth trajectory. There are some, including The Economist, who believe that the economy may be overheated. You have my assurance that our macro-economic authorities have a creditable record of macro-economic management," Dr. Singh said.

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