Indian rupee closes at a record low of 47.35 to the U.S. dollar

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Indian Gov't. to Tackle Slowdown Updated: Mon, Sep 10 9:59 AM EDT

By NIRMALA GEORGE, Associated Press Writer

NEW DELHI, India (AP) - Facing an economic slowdown, Prime Minister Atal Bihari Vajpayee pledged on Monday to pursue economic reforms and to speed up public works projects.

The Indian rupee continued to fall on Monday, closing at a record low of 47.35 to the U.S. dollar, highlighting the sluggishness of the economy.

Vajpayee told a top advisory council that although India's fundamentals were strong, the economy was being buffeted by declines in industrial production and exports, a slump in bank credit and a worsening fiscal deficit.

Officials also pointed to low inflation rates, high foreign exchange reserves and adequate food grain stocks as indicators that the economic slowdown is temporary.

Yet there are worries over the growth rate of 5 percent in the past two years. The government has been targeting 8 percent growth in order to double per capita income from the current $460 a year.

Vajpayee warned against "complacency over the grave nature of the current economic slowdown," during a meeting with his economic advisory council, Press Trust of India news agency said.

The government is looking at ways to stimulate the economy, including going ahead with labor law changes that would make it easier to fire workers and close down unprofitable state-run units. The government also wants to decentralize the power sector, reduce bloated government departments and open up sectors of the economy that have been reserved for small- and medium-sized companies.

However, these changes would require legislation, a lengthy process as Vajpayee's ruling National Democratic Alliance holds a majority in only one of the two houses of Parliament.

On the plus side, he said Indian information technology companies are growing at an impressive rate despite the global slowdown that has hobbled information technology firms in Western countries.

"Ours is still one of the five fastest growing economies in the world, at the time of a global economic slowdown," he told economists and lawmakers gathered in New Delhi.

Agriculture is also expected to post growth, pushing up demand for goods in rural India, where 75 percent of the country's billion-plus population lives

http://news.excite.com/printstory/news/ap/010910/09/int-india-economy

-- Martin Thompson (mthom1927@aol.com), September 10, 2001


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