Singh said he was confident India would grow 7 per cent to 8 per cent in the financial year starting on April 1 to mark the third straight year of growth of around 7 per cent or more.

That would lead India onto a new development path after growth rates in the 1990s of between 5 per cent and 6 per cent, Singh told a business conference.

"We are now at a point in time where we need to accelerate this growth further and jump into the 7-8 per cent band," Singh said.

"Our government is committed to putting in place a set of policies which will provide the necessary environment for making this growth possible."

Singh, who started a series of economic reforms in 1991 when he was finance minister, said extra growth of 1-2 percentage points a year might seem small but made a big difference over time.

"In 20 years, a growth rate of 8 per cent will deliver twice as much growth as compared to a rate of 5 per cent," Singh said.

Analysts said 7-8 per cent expansion was possible but the government needed to continue with economic reforms to sustain the pace of growth.

"I do agree with the Prime Minister's statement. There is more than a toss-of-coin probability about 7 per cent growth next year. I think it is possible due to the kind of economic reforms that we have taken," said Anantha Nageswaran, director with Singapore-based Libran Asset Managment.

The government has estimated the economy will grow 6.9 per cent in the year ending March 31, slowing from 8.5 per cent growth last year.

Exports have clocked more than 15 per cent annual growth in the past two years, industrial output growth has ranged between 7 per cent and 9 per cent and the services sector has expanded at a rate of more than 8 per cent.

Singh said his government was focusing on improving the lot of rural areas, where 60 per cent of India's billion-strong population lives, provide a vital source of consumer spending.

Agriculture output growth is estimated by the government to have slowed sharply to just 1 per cent this year after a 10 per cent leap last year.

The Congress-led government has pledged nearly 250 billion rupees ($5.74 billion) of new spending aimed at the rural poor and farmers. It is also spending heavily on modern irrigation facilities to reduce farmers' reliance on the annual monsoon.

These investments should start yielding substantial benefits for the rural poor by 2009, Singh said.

"This would provide a growth dividend which will be sizeable and, more importantly, more evenly spread out," he said.

He said his coalition would also step up spending on roads, ports and airports to provide India with an infrastructure that investors say is needed to underpin annual growth of 8 per cent.

India kicked off a 540 billion rupee highway development programme in 1999 to widen more than 13,000 km (8,125 miles) of highways from two to four lanes.

India is also trying to privatise the country's two biggest airports in Delhi and Mumbai to bring them up to international standards.