"Indian economy, mostly led by brain driven growth segments like biotech, pharma, entertainment, applied research and development, will grow between 7-8 per cent in the next few years," E&Y said in its latest report `Millennium Prospects of Indian Economy'. Apart from the new economy sectors, growth prospect of the old economy is also sound since there will be a major transformation of this sector on account of wider application of digital innovation, it said. Releasing the report, E&Y chairman KN Memani said "the observations made in the study reflect the perceptions of foreign investors and Indian businessmen and demonstrate what they perceive as India's growth potentials and compulsions." Faster growth will be achieved also due to reduction in time lag between government's policy formulation and implementation, it said.

Pointing to the longer time taken to set up Insurance Regulatory and Development Authority (IRDA) and replacing the Foreign Exchange Regulatory Act (FERA) with the Foreign Exchange Management Act (FEMA), E&Y said it took lesser time to take decision about disinvestment of state-owned companies and opening up of long-distance telephony. "These are perceived as positive developments by the foreign investors," the E&Y report said. "India should look forward to a foreign direct investment(FDI) inflow of 30 billion dollars a year keeping in mind the resource mismatch in infrastructure sector," it said.

The government should raise the ceiling of 49% of FDI in telephony, government guarantee for power sector to assure a reasonable return on investment, it recommended. "Greater degree of private-public partnership for promoting innovation, more liberal laws for corporate restructuring for mergers are also required," E&Y said.

The consultancy firm also called for amending the labour laws, speeding up of disinvestment process to achieve a target of Rs 10,000 - Rs 50,000 crore annually. Old economy companies should be encouraged to get listed in overseas stock exchanges, and stress should be given on exports, it added. "Agriculture policy should be tailored in such a way so as to achieve a four per cent growth," the report said. E&Y also said the digital divide in the country should be eliminated by connecting villages with the major markets enabling farmers to get access to market prices and realise the maximum price for their products specially in a era of removal of quantitative restrictions in the WTO regime.