Mumbai: The National Council for Applied Economic Research (NCAER) has called for stabilisation of interest rates and exchange rates in the country for restoring investor confidence.

The economic think-tank also called for a strengthening of the regulatory system, in order to provide warnings about the impact of the global financial crisis on the Indian economy.

''The restoration of confidence of the actors of Indian financial system would be faster if the interest and exchange rates are not volatile,'' NCAER said in its monthly report Macrotrack.

NCAER also underlined the need for providing fiscal incentives for large projects in the infrastructure sector to boost the economic growth at a time when the Indian economy is feeling the heat of the global financial market meltdown.

''The investment climate in areas such as infrastructure needs to be nurtured through fiscal incentives, and more importantly, by making the implementation of the projects more efficient," the report said.

Still, the report said, ''India could post significant growth in the current as well as the coming year, given the relative dominance of the domestic sector on the overall economy.''

A fall in the value of capital invested could, however, impact new investments in the short and medium term, it added.

Long-run prospects would, however, depend on technology, savings rate and human resources, the report said.