NEW DELHI // India's prime minister yesterday urged his re-shuffled administration to focus all its efforts on reviving the flagging economy, and said pushing through infrastructure projects would be prioritised.
Manmohan Singh admitted that "growth has decelerated, our exports have fallen and our fiscal deficits are expanding" as he spoke in New Delhi to ministers, including seven new cabinet members brought in on Sunday.
The change of team was seen as an attempt to relaunch Mr Singh's government after years of policy paralysis, worsening economic data and corruption allegations, with the next general elections due in 2014.
"Of particular concern is the fiscal deficit, which is too high and acts as a deterrent for domestic and foreign investment," Mr Singh said.
"We will have to overcome the constraints that currently deter or slow down [infrastructure] investment."
Mr Singh's comments follow a plan unveiled this week to slash the fiscal deficit to three per cent of gross domestic product by 2017 from 5.8 per cent last year and shore up investors' confidence in Asia's third largest economy.
The premier named energy supply as among the top obstacles to growth.
"It is imperative that we come to a common understanding on these issues ... to tackle these critical deficiencies," he said.
The Indian economy expanded at near double-digit rates between 2005 and 2011, but the International Monetary Fund forecasts just 4.9 per cent growth for the current fiscal year.
Mr Singh blamed the tepid growth on global financial conditions but also told his ministers not to be "unduly gloomy" about India's economic outlook.
"While we should take pride in our successes, it is important to recognise we are now also experiencing the fallout of difficult economic conditions worldwide. As a result, our growth has decelerated, our exports have fallen and our fiscal deficits are expanding."
He said the gap between energy demand and supply was a major cause of India's widening current account deficit, which is pegged at US$78.2 billion (Dh287bn) or 4.2 per cent of GDP, according to official figures released on Monday.
Mr Singh's Congress party-led government insists populist anti-poverty programmes must remain in place but analysts say large subsidies have to be slashed to curb the fiscal deficit.
* With additional reporting by IANS