India needs to restore economic confidence hit by the global credit crisis by helping struggling industries, boosting infrastructure spending and dramatically improving governance, senior BJP leader Arun Shourie said.

Arun Shourie said India was facing a serious economic crisis as it heads into elections in 2009 but the response had been lacklustre.

He criticised the current Congress party-led coalition for irresponsible off-budget spending, populist schemes that did not boost productive capacity and heavy-handedness in tackling supply-side inflation by simply raising interest rates.

"Our reactions would not be as slow or as half-hearted as the reactions of this government have been, whether it is on national security or it is on reforms or on meeting a crisis like the present one," Shourie, 67, said in an interview.

The $1 trillion economy boomed in the past three years, growing at an annual rate of 9 per cent or more. But that boom, twinned with soaring commodity and energy prices, saw inflation spiral to nearly 13 per cent in August.

The Reserve Bank of India (RBI) raised interest rates aggressively earlier in 2008 but has now had to drop them even more aggressively to counterbalance frozen money markets caused by the collapse of investment bank Lehman Brothers.

Now economists see growth at about 7 per cent this fiscal year as airlines, real estate and car-makers cut costs and output.

Shourie said aside from lowering interest rates, relief should be also given to industries such as textiles, construction, handicrafts and light engineering.

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