Committing to carry out reforms to facilitate higher investment flows, Prime Minister Manmohan Singh on Monday expressed hope that the Indian economy will revert to high growth path of nine per cent from next fiscal and even achieve double digit expansion in coming years.
“It is my expectation that we will return to a 9 per cent growth path in 2011-12. I am confident that the strong fundamentals of the Indian economy will enable us to achieve our objective of double digit (growth) in the coming years,” Dr. Singh said at business luncheon hosted by Nippon Keidanren.
He, however, admitted that there are challenges to recording such a high economic growth.
“I do not underestimate the many challenges we face in achieving such high levels of growth,” the Prime Minister said.
Dr. Singh said his government is reforming both direct and indirect tax system. Besides, reforms in financial sector, capital markets, education, and skill development are being carried out to create favourable climate for investment.
“We are determined to continue the process of economic reforms that will create a favourable investment environment and facilitate higher investment flows,” he said.
The Prime Minister hoped that there would be robust rebound in Indo-Japan trade and pegged it at over 20 billion dollars by 2012 from 10.3 billion dollars in 2009-10.
Dr. Singh said the current trade between the two countries is low as well as unbalanced. India had trade deficit of over $3 billion during 2009-10 with Japan.
On specific reforms, Dr. Singh said, “We are continuing the process of reforms of both direct and indirect taxes and hope to unify in due course all indirect taxes into a single Goods and Services Tax (GST). We are pursuing reforms in the financial sector, capital markets, higher education and skill development.”
Though global financial crisis did not have direct impact on Indian economy, its ripple impact slowed the growth to 6.7 per cent during 2008-09 against nine per cent in the previous three years.
The stimulus given by the government through cut in taxes and stepped up expenditure pushed up the growth to 7.4 per cent during 2009-10.
The growth further rose to 8.8 per cent in the first quarter of this fiscal. The Government has pegged the growth at 8.5 per cent this fiscal.
Efforts are on by the Centre to introduce GST from sometime next fiscal. In this connection, state finance ministers will meet Union finance ministry officials in Goa later this week.
The Government has also tabled Direct Taxes Code Bill in Parliament to replace the archaic Income Tax Act from April one, 2012.
Bills to reform pension system as well as private banking space are also being contemplated.