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• 'Reform process irreversible'
• 'My government will act a lot faster'
• Congress Party celebrates
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NEW DELHI, India (CNN) -- As the revived Congress Party cheered its leader, Sonia Gandhi, Indian Prime Minister Atal Behari Vajpayee said Sunday that his government's drubbing by Congress in state elections would not derail the country's economic reforms.

"Whatever is happening now is a sign of the vibrancy of Indian democracy," said Vajpayee, referring to the shock waves caused by the humiliating defeat of his Bharatiya Janata Party (BJP) in last week's state elections.

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The main opposition Congress Party won three-quarters of the assembly seats in Delhi and the northwestern state of Rajasthan and retained control of the central state of Madhya Pradesh.

Vajpayee, addressing Indian and international businessmen at the World Economic Forum, said his government was committed to economic reforms and would accelerate the process in the months ahead.

"I would like to assure you that volatility in Indian politics will have no fundamental impact on the process of economic reforms in the country," Vajpayee said. "The reform process has become irreversible."

Congress leaders have said the election results reflected discontent with the BJP, which heads an unwieldy coalition, because of the soaring price of essential commodities.

Anger over the rising price of staples such as onions and potatoes overshadowed May's nuclear tests, which earlier had been seen as a vote-winner for the BJP.

Vajpayee urged business executives to look at the strengths of the Indian economy and the immense opportunity it offered.

Vajpayee

"We also take some pride and satisfaction that, given the turmoil in the rest of Asia and many other parts of the world, our macroeconomic fundamentals continue to be strong," he said.

Vajpayee said the pace of change should be accelerated. "I assure you that my government will act a lot faster, and firmer, on our economic agenda in the coming months," he said.

He outlined a 12-point economic agenda and said the government was aiming for annual gross domestic product (GDP) growth of 7 to 8 percent in the medium term.

India expects its GDP to grow by about 6 percent in 1998-99 (April-March), compared with 5.1 percent in 1997-98.

But analysts cast doubt on the full-year estimate, citing slowing industrial output and unseasonable rains, and estimating the likely GDP increase at 5 to 5.5 percent.

Meanwhile, Congress Party supporters celebrated their organization's revival. Just one year ago, the popularity of India's oldest and biggest political party had dipped to an all-time low, making its victory last week in traditional BJP strongholds all the sweeter.

At the helm of its recovery is Sonia Gandhi, widow of former Prime Minister Rajiv Gandhi. She disagreed with speculation that the Congress Party will use the momentum of its victory to topple the BJP coalition.

"The government is bound to collapse on its own," she said. "So why should we rush into things?"

New Delhi Bureau Chief Anita Pratap and Reuters contributed to this report.