Addressing industry captains in a meeting of the prime minister's Council of Trade and Industry at his residence here, Manmohan Singh also expressed confidence of India registering a 7.5 percent economic growth rate but stressed the need for ending the tyranny of "Inspector Raj" (red tape).

"I do not wish to downplay the concern being expressed (on inflation)," he said in introductory remarks, explaining that the inflationary pressures were almost entirely on account of an increase in world oil prices.

The 18-member panel that he was addressing comprises industry honchos such as Mukesh Ambani, Azim Premji, Kumaramangalam Birla, N.R. Narayana Murthy, Ratan Tata and Kiran Mazumdar-Shaw.

Noting that his government had been able to "restore social peace, communal harmony and political stability at home," he also described as "impeccable", by and large, its track record in inflation management.

He expressed happiness that economic indicators had also been looking up in recent times.

"However, we cannot insulate ourselves from the impact of movements in world oil prices. We are, of course, committed to protecting the common man to the extent possible from these market-induced pressures.

"We must also see how, in the medium term, we can de-politicise energy pricing even as we make sure that the poor are not hurt by market forces."

The remarks come amid strong pressure from Left parties - which back the Congress-led United Progressive Alliance (UPA) from outside - to reduce the fuel prices in view of the burden on consumers.

Emphasising on revitalising economic growth, Manmohan Singh said India was now at the beginning of a new phase of growth. "...Over the next decade we should be able to register an annual rate of growth of around 7.5 percent."

For this, the rate of growth of agricultural production needed to be accelerated to up to four percent, he said. It also required industrial production growth rates of around 10 to 12 percent and the two were inter-linked.

"For this to be feasible, it is of utmost importance that we create an enabling environment that rewards creativity, risk-taking and the spirit of enterprise and adventure."

The prime minister said it was important to increase the rate of growth of capital formation in the economy to generate employment, reduce poverty and find resources for new investment.

Growth with equity and social justice, accompanied by creation of new employment opportunities, was a "political and social imperative".

He felt the decline in the ratio of capital formation to GDP had declined in recent years, a trend that needed to be reversed.

"I commit our government to re-energising the economy's growth engine, recreating the policy and political environment required to boost investor confidence and enable an increase in private investment in the economy."

Manmohan Singh said tackling the challenge of stepping up investment and fostering capital formation in agriculture and rural economy was his first priority.

He also vowed to give attention to bringing in massive investment in infrastructure with domestic and foreign participation and a public-private partnership.

--Indo-Asian News Service