labels: industry - general, economy - general
Reforms must be kept up and inflation down: FMnews
29 September 2006

New Delhi: India needs to speed up reforms and maintain fiscal discipline to sustain high economic growth, finance minister P Chidambaram said on Friday as he hinted at more steps to keep inflation under 4 per cent.

"Unless financial sector reform is completed, it will be hard to sustain high growth," Chidambaram warned, stressing that only reforms combined with discipline would enable the economy to sustain growth rates of more than 8 per cent.

India''s gross domestic product (GDP) grew by 8.4 per cent in the year ended March 2006.

Sounding a note in favour of SEZs in the ongoing controversy, Chidambaram said the government wanted India to be a manufacturing hub in 12 to 24 sectors, and was therefore setting up special economic zones for petrochemicals, information technology, electronics, pharmaceuticals and auto parts.

He said tax breaks and access to bank loans in these zones were essential to achieve high growth in manufacturing. "The government will ensure that credit is not denied or delayed, and is available at reasonable rates to productive sectors," he said.

Noting that there was increasing pressure on food prices, Chidambaram said he would discuss further steps with the central bank governor to keep inflation in check. Data released on Friday showed annual inflation at 4.56 per cent for the week ended 16 September, but Chidambaram said the government hoped to keep inflation at 4 per cent or less during the current fiscal.

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Reforms must be kept up and inflation down: FM