NEW DELHI — India’s prime minister has expressed optimism about the country’s economy, calling the recent slump a temporary downturn. The slowest growth in a decade calls into question the economic standing of a country seen as one of the world’s rising economic stars.
Prime Minister Manmohan Singh says he is confident that India will disprove the pessimism expressed by some in the financial community.
Speaking before top business leaders at a meeting in New Delhi Wednesday, Singh promised decisive action to jump start economic growth, which is down to five percent.
"I do not believe our future is five percent growth," he said. "We grew at an average of eight percent in the last ten years and we can get there again and that should be our combined endeavor. But this calls for speedy and decisive governmental action. The environment is not what it should be and that is what the government should correct."
The slowdown is partly because of global factors. Economists blame it mainly on a worsening investment climate in what was, until recently, regarded as one of the world’s most dynamic economies. Several domestic companies have opted to invest overseas rather than in India, citing bureaucratic bottlenecks and lack of reforms.
Singh admitted problems such as inertia and corruption have contributed to the decline in private and public sector investment. But he urged industry to keep faith and promised to ease regulations and fast track projects.
"There are many projects that have been stuck either for want of regulatory clearances or, in the case of power projects, because of fuel supply problems," he said. "For a variety of reasons in the government, decision-making has also slowed down. One reason is the hesitation on the part of officials to take some critical decisions."
Singh also sought to reassure foreign businesses, which are awaiting reforms that will make investing easier. Mr. Singh says the government is reviewing the foreign direct-investment policy to see what can be done to make the country more attractive for investors.
A decade of rapid growth has created a huge middle class and many foreign investors have looked upon India as a big market. In recent months, the government has implemented reforms in sectors such as retail, aviation and insurance, hoping to draw in billions of dollars worth of investment.
There is some optimism. The government says the country is emerging from its worst economic performance in a decade and will grow at about 6.5 percent in the next fiscal year.