The Associated Chambers of Commerce and Industry on Monday welcomed the United Progressive Alliance government's new economic policy as enunciated in the Presidential address, saying it would instil confidence and help stabilise the capital markets and hoped that the Budget would also be prepared on similar lines.

"The industry was assured and hopeful that the Budget to follow will now be on similar lines which would boost economic growth as well as induce wider dispersion of the benefits of such growth to much larger sections of the Indian population," Assocham President M K Sanghi said in New Delhi.

• Highlights of UPA's economic agenda

He also complimented the government for recognising the need for making labour laws flexible to increase employment opportunities and improve quality productivity.

Sanghi said for sustained seven to eight per cent economic growth, the government's promise of massive public investments in infrastructure, rural development, agriculture and industry, boost to FDI and selective privatisation among other things was crucial.

"It is laudable that the economic agenda of the government explicitly mentions the need for and focuses on the key role played by capital markets in boosting the rate of investment in the economy," he said.

Expressing the hope that government would introduce the value-added tax before April 1, 2005, he said to contain fiscal deficit, it was imperative to focus on expenditure rationalisation, policy formulation and regulatory activities rather than direct participation in economic activities.