Thumbs up for new India policy
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(CNN) -- Indian business has welcomed the new government's economic agenda, saying it gives a clear direction and will deliver high growth rates.
The new Congress-led coalition under Prime Minister Manmohan Singh unveiled its policies Thursday, saying it aims to achieve an annual economic growth rate of at least 7 to 8 per cent over the coming decade.
Economic analyst Professor Shubashis Gangopadhyay, Director of the India Development Foundation in New Delhi, told CNN on Friday that this level of growth was achievable, but the key question was whether it could be sustained.
India, the world's 12th largest economy, grew 8.1 percent for the year that ended March 31, following a spectacular 10 percent year-on-year jump in the December 2003 quarter.
India's peak industry body, the Federation of Indian Chambers of Commerce and Industry (FICCI), said earlier this week the government should consider a growth target of 10 percent.
FICCI President Yogendra Modi said the government's agenda, known as the Common Minimum Program, was "progressive" and should encourage more investment from overseas.
The Confederation of Indian Industry also welcomed the program, saying it aimed to address both economic growth and social equity.
But Singh confirmed a slowdown of India's privatization drive Thursday, saying he was abolishing the privatization ministry and handing its duties to the finance ministry.
He said the government would not privatize its "nine gems" -- the nine most profitable state-run units that include four oil companies: Indian Oil Corp, Oil and Natural Gas Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp Ltd.
Asset sales
A variety of state-owned businesses were slated for sale under the privatization programs of the previous government. Asset sales earned the outgoing BJP-led government of Atal Behari Vajpayee about 154 billion rupees ($3.4 billion) in the year that ended March 31.
Singh said he would not sell off profitable companies, but there was no bar on them selling minority stakes.
"We have to distinguish between privatization and disinvestment," he told media after the policy announcement, Reuters reported.
Under Singh's policy agenda, privatization will be on a selective basis and every effort will be made to modernize and restructure sick state firms.
India's main stock market in Mumbai, the BSE, lost 1 percent Thursday and is weaker in early Friday trade, with the Sensex below 5,000 points.
The markets have been volatile since the surprise victory earlier this month for the Congress-led coalition, now known as the United Progressive Alliance (UPA).
But they were soothed by Singh's appointment last Sunday of Harvard-educated P. Chidambaram as finance minister. He is regarded as pro-reform.
In statements just before the release of the Common Minimum Program, the FICCI said the government should consider a target of 10 percent GDP growth.
It said this would provide 3.9 million agricultural jobs, 25.8 million industrial jobs and 30.4 million services jobs, thereby addressing the 60 million jobs that is needed over the next five years.
It said its own economic modeling had demonstrated the feasibility of these targets.
The FICCI also urged a speeding up of India's disinvestment and privatization programs, saying this would help pay for higher spending in public health and education.
It said the government could "easily" raise 250 billion rupees ($5.5 billion) a year through disinvestments.
Congress president Sonia Gandhi pledged in the CMP the alliance would look after "the poorest parts of society", as well as protecting the interests of farmers, women, young people and minority groups.
The UPA is made up of 11 parties and has support from another 10 parties.
