India needs to 'reboot' economy: WEF

India needs to "reboot" its economy by reducing endemic corruption and slashing red tape to get back on a high growth path and reduce poverty, delegates said at a high-profile economic forum on Wednesday.

The call at the India World Economic Forum came as Prime Minister Manmohan Singh's Congress-led government struggles to revive the economy it forecasts could grow by as little 5.5 percent this year -- the lowest rate in a decade.

India's economy needs to expand by double-digits to significantly reduce widespread poverty in the country of 1.2 billion, economists say.

"We need 10 percent growth -- there's tremendous economic inequality in our country," said Bajaj Auto chairman Rahul Bajaj, opening the two-day conference in Gurgaon, a satellite city of the national capital.

"We need to reboot (the economy)," he said.

But business figures warned that efforts to revive the economy will fail unless India reins in corruption and stifling bureaucracy and opens up further to foreign investment.

The chief executive of the world's biggest food company Nestle, Paul Bulcke, said so many "regulations and complexities kill entrepreneurial spirit".

Delegates also said the government needed to seriously tackle graft which has been one of the biggest political issues in India over the last few years, sparking popular protest movements.

"Government officials should function from glass houses," said Vinod Rai, India's auditor general whose office has been relentlessly pursuing the government over corruption allegations involving telecom and coal-mining deals.

And while the government has recently opened up the retail, broadcasting and aviation sectors to wider foreign investment, delegates said India needed to do more to open up its markets and make it easier for businesses to operate.

While the measures have been called some of the biggest reforms since Singh began the process of India's economic liberalisation two decades ago, critics say the changes are mainly superficial.

Delegates said the government is showing no stomach to tackle deeper constraints such as rigid labour protection laws and overhauling antiquated land acquisition rules holding up vital infrastructure projects.

Gita Gopinath, an economics professor at Harvard University, added that "it is no mystery why growth has slowed down. This is not a country which can't afford to have reforms every 20 years -- you have to have consistent reforms."

But participants also noted that even minor changes such as hiking fares on dilapidated rail systems can become major political flashpoints and said reforms need to be sold to the public more effectively.

India's new reform blitz has already cost the government its parliamentary majority with the exit of a key ally who has threatened to bring a no-confidence motion against its former partner when the house reopens later this month.

"Unless growth goes down to a larger fraction of people, there will be no deeper consensus for reform," said Gopinath.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9273-0.0092-0.98%
    AUDUSD=X
    0.5524-0.0042-0.76%
    AUDGBP=X
    0.6702-0.0082-1.21%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg