Prime Minister Manmohan Singh, who as finance minister in the 90s initiated liberalisation, on Sunday said his government would steadily pursue reforms to feed economic growth, while withdrawing the fiscal stimulus by next year.
"Growth is expected to be around 6.5 per cent (this fiscal). There are clearly signs of an upturn in the economy.
With a normal monsoon next year, we hope to achieve a growth rate of over seven per cent," he said addressing the inaugural of the India Economic Summit organised by WEF and CII here.
For this growth to happen, Singh said reforms were essential, including in insurance that require legislative changes.
"(We) will strive to build political consensus needed for these legislative actions to be completed," he said, adding that a reformed financial system would help provide the finances needed for the country's development, especially for infrastructure.
He said the current economic showing indicated the resilience of the country and also "vindicates... the corrective action taken by the government to manage the (impact of the global economic) downturn - like other countries we resorted to a significant stimulus and we will take appropriate action next year to wind this down.
Singh said while the integration of the Indian economy with the rest of the world undoubtedly created new opportunities, the effects of the financial crisis was a challenge thrown up by the same trend.
"The crisis has disrupted economies everywhere... We have avoided a collapse on the scale of the Great Depression.
The worst is behind us though the path to global recovery will be long and uncertain," he said.
The country had introduced fiscal stimulus by way of excise duty cuts last year to insulate the economy from the global crisis.
"Our medium term objective is to achieve a growth rate of 9 per cent per annum," Singh said, adding that the fact that India's domestic savings rate is now as high as 35 per cent of GDP, the target is eminently feasible.
He said the country had plans for a large increase in investment in all key infrastructure sectors: Power, roads, ports, airports, telecommunications, irrigation and urban infrastructure.
While some of this investment will be through the public sector, private investment too would play a large role in achieving this target, he said, welcoming foreign investors to park their money in the country.
Singh said the government's policy on FDI would be aimed at attracting more foreign direct investment.
"We are particularly keen to rationalise and simplify procedures so as to create an investor friendly environment," he said.
He said India has managed to attract $121 billion worth of FDI since 2001-02 but "this is not a large number given the scale of our economy".
He further said to achieve inclusive growth, "We will also have to expand government expenditure in critical social sectors, especially health and education, including skill upgradation of workforce."
The government last week cleared a proposal wherein proceeds from sale of its equity in public sector firms could be directly used to fund social sector schemes such as education and health care.
"We now hope to see faster progress in sale of a portion of Government shareholding in the domestic market and issue of fresh equities in respect of the selected companies," Singh said.
To a question on the two issues close to his heart, Singh said: "Education and health care. We should have done a lot more on these two areas. We are late in this process. It is my sincere hope that in the next couple of years, we can get public sector involvement and investment in education to six per cent of our GDP.