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Wednesday, 5 September, 2001, 10:38 GMT 11:38 UK
Vajpayee plans economic boost
India construction
Money is to be spent to rebuild the economy
Indian Prime Minister Atal Behari Vajpayee has unveiled a plan to revive his country's slowing economy with fresh reforms.


The country believes that our economic performance so far has not matched our potential

Prime Minister Atal Behari Vajpayee
At a meeting held late on Tuesday, he pledged 750bn rupees ($16bn) to kick-start the economy.

He also set up a cabinet committee on economic strategy with an aim to provide direction for growth.

India's economic growth has fallen to 5.2% in 2000-01 from 6.4% in 1999-2000.

The government has now decided to increase the speed of privatisation and reduce the size of the administration.

Projects

During a three-and-a-half hour meeting with 14 economic ministers, Mr Vajpayee said financial assistance would be provided for projects to be implemented by different ministries.

The cabinet secretary has been asked to submit a report within a fortnight regarding the status of different infrastructure projects, such as those in building new roads and power schemes.

Vajpayee
Vajpayee: Eye on Uttar Pradesh polls?
Mr Vajpayee has also decided to constitute a group of ministers to initiate reforms in the labour sector.

"The country believes that our economic performance so far has not matched our potential. So too does the rest of the world," the prime minister said.

Economic woes

The meeting was attended by Finance Minister Yashwant Sinha, ministers in charge of power, roads, agriculture and rural development, petroleum, and other senior government officials.

A soaring fiscal deficit, caused by heavy government borrowing and higher wage bills for the bloated state workforce, has hit the Indian economy which is already facing an industrial recession.

Last week, Mr Vajpayee pointed out that in certain states, government spending on officials was more than their total revenue earnings.

Analysts say the government wants to put behind the controversies generated by recent scams in the economic sector and speed up the economic revival.

But some say it could also be a measure just ahead of the forthcoming state assembly elections in the north Indian state of Uttar Pradesh.

See also:

15 Aug 01 | Business
IMF downbeat on India
01 Aug 01 | Business
India's investors hold tight
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