The rating agency added, "This even calls for reforming bureaucracy, if India is to remove the fear of red tapism from the minds of the foreign investors".

Fitch Ratings India on Monday released its monthly "Economy Update", a research report highlighting and analysing the performance of different industries, reasons for inadequate FDI inflow and Reserve Bank of India's (RBI) norms for valuation of investment by financial institutions (FIs).

The rating agency said that it welcomed the approval by the Power Ministry's Crisis Resolution Group (CRG), along with leading FIs and banks, to allow sixteen power projects with a capacity of 7,000 MW to reach financial closure by the end of this fiscal.

"The six major infrastructure industries - electricity, coal, steel, crude petroleum refinery products, and cement have registered a combined growth of 11.7 per cent in the month of October 2000. The corresponding figure for the same month last year was 9.5 per cent. October's growth rate is also higher than the 8.5 per cent growth observed in September'2000," said Fitch Ratings India.

Fitch Ratings India feels that the investment valuation norms for FI's, (recently changed by RBI) is aimed at increasing transparency in the system, though the bottomline of the FIs are likely to be affected. The FIs would now need to mark their investment to market, with certain exceptions.

"Confirming the slowdown in the economy, diesel consumption showed a dip of 8.2 per cent during October 2000 as compared to the same period last year. In fact, diesel consumption slumped during six out of the first seven months of the current fiscal. High-speed diesel sales have also declined, showing a negative growth of 8.4 per cent. The increase in international petroleum prices primarily has restricted the growth in domestic demand," the agency said.