Government says slowing of reforms could hurt growth
India's economy has responded well to reforms started a decade ago but critical gaps in the process need to be addressed to ensure sustainable long-term growth, the government said on Friday.
The Economic Survey for 2000/01 (April-March), an annual report card on the economy, identified the high level of fiscal deficit as the single most critical issue affecting growth prospects.
The Survey also called for reforms in the structure of taxes and subsidies, a reduction in the size of government and for legal reforms to rev up growth.
Unless the reforms process is speeded up, long-term growth could suffer, it warned.
The government, which is due to present the national Budget for the next financial year on Wednesday, has come under intense pressure from opposition parties after it decided this week to privatise a state-run aluminium firm.
The opposition says the government is selling its assets too cheaply.
On Friday, the Parliament was adjourned after opposition members raised a ruckus over the government's decision to divest its stake in Bharat Aluminium Company Ltd.
GROWTH TO SLOW DOWN
Economic growth is expected to slow down to six percent in 2000-01 from 6.4 per cent a year earlier and 6.6 percent in 1998-99, it said.
The Survey saw both short-term and long term-term constraints to growth.
Sounding a cautionary note, the survey said the unfolding economic situation needed to be monitored carefully and called for measures to boost confidence in the economy.
It also called for reforms in the structure of subsidies, particularly those directed at the fertiliser, petroleum and sugar sectors.
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 industry to generate new jobs," it said.