Finance Minister Jaswant Singh said more licences would be granted to set up private banks, to further open up the financial sector.

The Reserve Bank of India had in January 2002 approved in principle the proposals of Kotak Mahindra Finance Ltd and Rabobank India to set up banks.

Delivering the keynote address at the India Economic Summit 2003, organised by the World Economic Forum and the Confederation of Indian Industry, Singh said new guidelines on the shareholding pattern in private banks would be issued soon.

The inflation rate would remain at about 4 per cent this fiscal, the minister said, adding that it was expected to come down further.

"I am not happy that it should remain at 4 per cent," he said. The attempt will be to increase the spending power of people. "I want my countrymen to spend more. The more they spend, the more will be the production and income," he said.

However, as far as administered interest rates and bank rates were concerned, Singh said he faced a dilemma. The government should be able to offer globally competitive interest rates to industry and simultaneously ensure that lower interest rates did not harm people, he added.

The minister also lauded the efficient management of the rupee and its rise against the dollar. "The rupee has show a certain degree of strengthening against the dollar, but not against the euro," Singh said.

While ruling out too much intervention, he said, exporters complaining of the appreciating rupee would do well to switch to the euro from the dollar.

He said the country's foreign exchange reserves were comfortable. "Although pundits say I am handling it all wrong, my idea is to give to the people of India a sense of plenty," Singh said. His effort is to try and alter people's mindset about India, from an economy of want to that of surplus.

The manufacturing sector would continue to receive fillip from the government, the minister said, adding that Indian companies had shown results that the country could be proud of.

"We have to reach out to the world, especially in pharmaceuticals and biotechnology," he said.

The finance minister, however, said the fiscal deficit continued to worry him. "We were able to arrest the rise of the fiscal deficit last year," he said, adding that the ministry would strive to reduce it in the future. The management of state finances also demanded a proper approach, Singh said.

He stressed reforms as the way to attain a higher growth of 6-7 per cent this decade. "The Indian economy is fast approaching a point of criticality. I do not know when it will happen, but it will happen soon. When it happens, growth will be explosive," he said. The 6-7 per cent growth rate for the decade could then be higher, the minister added.

Admitting that there was some setback to reforms after the Supreme Court's judgment staying divestment in Hindustan Petroleum and Bharat Petroleum, Singh said such things happened in a democracy.

The government was, however, committed to privatisation and a move away from public sector enterprises that were a drag on the economy, he added.

Responding to a query on the way forward after the failure of trade talks in Cancun, the minister said, "Cancun is not equal to the World Trade Organisation. Please do not measure the WTO by the failure to achieve results in Cancun."

He, however, said food security was vital to India. "I will continue with agricultural subsidies come what may, even if it means that I am paying for the sector's inefficiency," he added.

To sustain this year's high agriculture growth on the back of a good monsoon, Singh said, "We need a second green revolution, which will recognise India as a vast reservoir of farm products and processed food."

India had the highest irrigated land, and its arable land was second only to the United States, he said, adding, "We need to concentrate on waste-land development, agro-processing and water management."

Despite the decade's worst drought last year, the minister said the government was able to distribute more foodgrain to drought-hit areas and export sugar, wheat and rice to other needy nations.

Singh also said India and the US continuously needed to engage each other. "We must seriously address the economic aspects of our relationship, which has largely remained weak. Trade, industry and commerce are still uncharted territories," he pointed out.