New Delhi, Aug 15 (IANS) With a strong note of optimism on the economy, Prime Minister Manmohan Singh Sunday assured the nation that inflation will be tamed, promised world-class infrastructure to spur growth and announced a new institution to develop high-yielding seeds.

"Today, India stands among the fastest growing economies of the world. As the world's largest democracy, we have become an example for many other countries to emulate," the prime minister said in his Independence Day address.

"We are building a new India in which every citizen would have a stake, an India which would be prosperous and in which all citizens would be able to live a life of honour and dignity in an environment of peace and goodwill."

The prime minister said there were indeed problems like high prices of food items like grain, pulses, vegetables and fruits, which were hurting the poor the most, and underlined that he shared the people's concern.

"I would certainly like to say we are making every possible effort to tackle this problem. I am also confident we will succeed in these efforts," he said in his seventh such Independence Day address to the nation.

The Oxford-educated economist prime minister also justified the recent hike in prices of petroleum products and said there was no option before the government given the high cost of crude oil, of which India is a major importer.

"The subsidy on petroleum products has been increasing every year. It had become necessary therefore to hike the prices of petroleum products," he said, adding it would have otherwise limited the funds available for welfare schemes.

"If this had not been done, it would not have been possible for our budget to bear the burden of subsidy and our programmes for education, health and employment of the poor would have been adversely affected."

The prime minister said his government laid special emphasis on the welfare of farmers and farm productivity, after finding that agricutlrue had poor growth for about eight years until he took power in 2004.

He accordingly announced a new institution named after Nobel laureate Norman Borlaug - who ushered India's Green Revolution in the 1970s -- to develop new seeds and farm technology, with the aim of a 4 percent farm growth.

"Our country has not witnessed any big technological breakthrough in agriculture after the Green Revolution. We need technology which would address the needs of dry land agriculture."

Poor physical infrastructure was another area on which Manmohan Singh expressed concern and said private sector had to be roped in as in the case of the "excellent" new terminal at the Delhi airport.

"There is a large deficit in our physical infrastructure and affects economic development adversely," the prime minister said, adding that large funds needed for improvement demanded a partnership between the government and private sector.

"About a month and a half back, I dedicated a new terminal of the Delhi airport to the nation. This is an excellent terminal which has been completed in record time. We will continue to make such efforts to improve our infrastructure."

Overall, the prime minister expressed satisfaction over the progress the Indian economy was making, especially in the light of severe drought-like situation last year and the worst global slowdown since the 1930s.

"I am happy to say we have acquitted ourselves well in difficult circumstances. Despite many problems, the rate of our economic growth has been better than most other countries in the world. This shows the strength of our economy."