India says gaps in reforms cloud long-term growth
India needs to accelerate privatisation, reform existing laws and bring its stubbornly high fiscal deficit under control to ensure long term economic growth, the government said on Friday.
"Despite the positive response of economic agents to reforms, identifiable gaps in the reform process continue to cloud the long-term growth prospects of the economy," the Economic Survey for 2000-01 (April-March) said.
The Economic Survey is an annual report card on the economy and is released just before the national budget. Finance Minister Yashwant Sinha presents the 2001-02 budget on February 28.
The survey identified the fiscal deficit as a key problem hampering future growth as it kept interest rates high and crowded out private investment.
It also called for reforms in the structure of subsidies, particularly those directed at the fertiliser, petroleum and sugar sectors.
Other areas that required urgent attention were privatisation of state-run firms, downsizing of the government and the taxation structure, it said.
The survey also called for labour reforms.
"Labour laws and procedures have reduced the incentive for organised labour to work efficiently and have made it unprofitable for organised to generate new jobs," it said.
"Greater flexibility is essential if Indian industry is to compete with Chinese industry and generate as many new jobs as the latter has."