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India Prime Minister Narendra Modi says economy on the mend as tough steps bear fruit

We've tightened screws in banking sector: Indian PM Modi

Tough steps taken by the Indian government are starting to bear fruit and there is no reason for alarm, Prime Minister Narendra Modi told CNBC TV-18 in an interview Friday.

Modi, who swept to power in 2014 on a promise to shake up India's economy, said certain sectors were still feeling the strains of the policies implemented by the previous United Progressive Alliance government.

Private investments had suffered while banks had been hobbled by loans that had turned sour, he said.

"In spite of all this, the roadways have developed at a good pace, railways have developed at a good pace. The electronic manufacturing has increased by six times, " Modi said in the interview, without providing specific details.

"These things show that we didn't choose the short cut. There is a message written on railway platforms — short cut will cut you short — that's my opinion too. So I am of the opinion that we should not take the short cut and the results can already be seen, " he added.

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"The situation have improved now so there isn't much to worry about."

Figures released on Wednesday showed India's economy grew by 7.1 percent on-year in the three months through June, the fastest pace in the world among major economies but short of the 7.9 percent expansion witnessed in the previous quarter.

Modi's government also secured a major breakthrough with the passage of a historic Goods and Services Tax (GST) bill in both houses of parliament that is expected to simplify India's byzantine tax system.

However, a strike by public-sector workers on Friday underscored the challenges the government faces to make Asia's third-largest economy more competitive.

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