"Financial sector reforms and increase in investment in infrastructure are our two biggest priorities," Singh said in an interview published in Financial Times on Monday coinciding his visit to Britain.
About the obstacles in the way of reforms, he said, "Politics is the art of the possible and I have to live with the situation I inherited. There have been difficulties, but I have not given up hope. We have not completed half the term." The Communist Party of India (Marxist) is opposed to lifting foreign direct investment caps in the insurance sector, currently set at 26 per cent, while Reserve Bank of India is ring-fencing banks from takeover until 2009.
Singh said, "We cannot achieve our social and economic objectives unless there is reform of the insurance and banking system. Infrastructure requires long-term investment and our banking system is essentially short-term oriented."
Sustaining a growth rate of 8-10 per cent would hinge on "massive investments" in infrastructure that would require India to mobilise long-term capital more effectively than was currently possible in a short-term debt market, he said.
He also defended the creation of special economic zones, which have been attacked by left wingers in the congress party and fiscal hawks in the finance ministry.
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