The Hindu Business Line : `India on path for sustained growth'

THE CHAIRMAN of the US India CEOs Forum, Mr William Harrison III, and the Finance Minister, Mr P. Chidambaram, addressing a conference in the Capital on Friday. — Ramesh Sharma

New Delhi , March 3

The Indian economy is on course to achieve 8 per cent gross domestic product (GDP) growth on a sustained basis, the Finance Minister, Mr P. Chidambaram, has said.

"We are now in a position to say with a measure of pride that we believe we may have reached an inflection point in India's economic progress. That we could now well be on a road that takes us on a sustained basis to 8 per cent growth every year and gives us the capacity to dream for higher growth," Mr Chidambaram said at the conference on `Indo-US Economic cooperation' here on Thursday.

The Finance Minister asked foreign investors to seize the opportunities thrown up by India's desire to move from an 8 per cent growth path to 10 per cent growth level.

Stating that foreign investment would be extremely beneficial to India, Mr Chidambaram said the country would require about 4 per cent of GDP as foreign investments.

"Foreign investments play a crucial role. It brings us the extra investments to take the investment rate to a level where we can aspire for 10 per cent growth," he said.

While the savings rate in 2004-05 stood at 29 per cent, the investment rate was 30 per cent.

"However efficient an Indian economy is, a 30 per cent investment rate would only give growth rate of 7.5 per cent and 8 per cent. The goal is to raise 30 per cent investment rate to 32 and 34 and if possible 36 per cent. Some of this will come from increase in domestic savings i.e. 29 per cent moving to 30 and 31 per cent", Mr Chidambaram said.

On the power sector, the Finance Minister said the Government had already announced five ultra mega power projects, each with a capacity of 4,000 MW.

He said these projects would be given out on an international competitive bidding basis to the lowest bidder purely on tariffs and the award would be made on or before December 31 this year.

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