New Delhi: The government has asked state-run firms to boost investment to stimulate a slowing economy, a daily newspaper reported on Wednesday, citing anonymous government sources.
A combination of feeble growth in the United States and Europe, prolonged monetary tightening to quell high inflation and a decision-making paralysis in government has led to a slowdown in growth and shrinking of corporate investments.
Prime Minister Manmohan Singh said on Sunday that the economy would likely grow about 7 percent this fiscal year that ends on March 31, below a revised forecast of about 7.5 percent growth issued by his government last month and sharply lower than the 8.5 percent growth last year.
The newspaper's report said the decision to ask the state-run firms to spend beyond Rs 1.76 trillion (about USD 34 billion) in the next financial year that starts on April 1 was taken after a meeting convened by the Prime Minister's office.
The firms have been told to diversify into related areas if sufficient investment options were not available in sectors that they operate in, the report added.
India's economy was shielded from the 2008 global crisis by a USD 36 billion fiscal stimulus made up by new spending and tax cuts. However, the government has said it does not have any fiscal headroom to provide a stimulus this year as it did in 2008/09.