Double-digit growth rate possible: FM

By agencies   |   Friday, 27 January 2006, 08:00 Hrs
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DAVOS: Finance Minister P. Chidambaram today said that Indian economy could grow by 10 percent in the 2006-07 fiscal year if investment levels were ramped up.

"Eight percent (economic growth) is perhaps the ceiling for the current year, given the current level of investment as a proportion of gross domestic product (GDP).

"But if we can ramp up the investment to GDP ratio to say 30 or 32 percent, then 10 percent is possible," Chidambaram said at the World Economic Forum in Davos.

"We will aim at 8 percent but we should try to do better than that. To the extent that we fall short of our requirement of 32 percent or so, then we would have to open the door more wide for foreign direct investment."

India's rising economic importance has been widely promoted at this year's summit in Davos, where chief executives and politicians gather to discuss global trends and network.

Many Davos participants were surprised at the Reserve Bank of India's decision this week to increase short-term interest rates by a quarter percentage point, but Chidambaram said that the move could be reversed in April.

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