Labour reforms, infra spend key to Indian eco growth: UNDP

India needs to reform its rigid labour laws and invest more on infrastructure to return to a trajectory of higher growth, a senior official of the United Nations Development Programme (UNDP) said on Monday.

Ajay Chhibber, UNDP's Asia-Pacific head, also said the implementation of the goods and service tax (GST) was key to raise growth to the 9% seen in the recent past years.

Asia's third largest economy grew 6.7% in 2008/09 (April-March), and many see it expanding at 6.5% in the year to March 2010.

"Get these three right and we will have the extra 3-4% growth that we need to go from 6% to 9-10%," Chhibber told Reuters on the sidelines of the World Economic Forum.

The government plans to implement the GST from April 2010 but has failed to bring a vital consensus among the state governments while stiff opposition from labour unions and left parties has slowed the labour reform process.

India had grown an average of 9.4% in the three years to March 2008, and last week Finance Minister Pranab Mukherjee said it would take more than a year for the economy to get back to 9% growth.

Chhibber said the immediate challenge for India was managing the unwinding of the monetary stimulus and reducing fiscal deficit from the current 16-year high, so as to anchor inflation.

The Reserve Bank of India in its policy review in October had warned of possible asset bubbles and took what analysts said were first steps towards unwinding its easy monetary stance.

"Over a period of time, I cannot see how such a large amount of monetary easing would be able to continue without it having an impact on prices," Chhibber said.