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PM defends reforms, says it takes courage to revive economy

But Mamata not convinced, says reform does not mean 'sell out everything'

Saturday September 15, 2012 06:35:39 PM, IANS

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New Delhi: Prime Minister Manmohan Singh Saturday defended the policy reforms unveiled by his government, and said those were necessary to revive economic growth, improve the investment climate and boost public finances.

And he hoped the Indian economy battling a slowdown would rebound in the second half of the current fiscal.

"Our immediate priority must be to orchestrate a rebound in the second half of the current year. We should then try to accelerate growth to reach around 9 percent by the end of the Plan period," Manmohan Singh said, warning that a prolonged "policy logjam" could slow economic growth to 5 percent.

"It will take courage and some risks but it should be our endeavour to ensure that it succeeds. The country deserves no less," Singh said at the meeting of the full Planning Commission, called to finalise the country's 12th Five-Year (2012-17) Plan.

In what is viewed as big bang reforms, the government a day earlier opened way for FDI in multi-brand retail, allowed foreign airlines to buy stakes in local carriers, and raised the FDI cap for broadcast carriers.

"To achieve the target of 8.2 percent growth (contained in a new five-year economic plan), we need to revive investment in the economy. The investment environment is therefore critical."

Singh also stressed the need to restore the fiscal health of the country.

"I believe we can attract financing we need, provided our fiscal deficit is seen to be coming under control and the growth momentum is regained."

India's fiscal deficit is projected at 5.1 percent of gross domestic product (GDP) in the current financial year, compared with last year's 5.75 percent, which many believe could spin out of control and touch 6 percent if the government does not curb its expenditure on subsidies in fuel and fertilisers.

Viewed in that sense, according to the prime minister, Thursday's increase in diesel prices is "an important step in the right direction" as fuel prices in India are out of line with world prices.

"Our fiscal deficit is too high and is attracting adverse comment from analysts. It must be brought down over the medium term to release domestic resources for productive deployment in the economy."

He referred to falling exports and the current account deficit of 2.9 per cent of the GDP that the 12th Plan projects.

"This must be financed mainly through Foreign Direct Investment and Foreign Institutional Investment flows, so that reliance on external debt is contained," he said.

The prime minister called for speeding up the infrastructure projects, which are crucial for removing supply bottlenecks that constrain growth in other sectors.

Saying that the country needs around a trillion dollars of investment in infrastructure, Singh said good infrastructure will boost investor sentiment to raise the overall rate of investment.

Focussing on the agriculture sector, he said agriculture growth needs to be accelerated to 4 percent.

At the end, the prime minister said, "Our objective is not just growth of GDP, but growth that is inclusive and also sustainable."

 

'Mamata raps PM'
In an indirect attack at Prime Minister Manmohan Singh, Trinamool Congress supremo and West Bengal Chief Minister Mamata Banerjee Saturday said political leaders should be more bothered about the common people rather than winning personal laurels.

Infuriated over the twin "anti-people" decisions - hike in diesel prices and nod to FDI in retail - Banerjee, whose Trinamool Congress is the United Progressive Alliance's second largest constituent, reminded the Congress not to cross the "Lakshman Rekha" (red line).

"We are not in favour of toppling the government. But they should not forget the 'Lakshman Rekha' of the alliance. We will not agree with any anti-people decisions. We have given 72-hour deadline to rethink... if you roll back, it's good. But if not, then be ready to face the consequences," she said, addressing a protest rally here.

"I don't agree with such economic reforms which are anti-people because I believe in grass root reforms which concern the masses. Leaders should stop taking decisions which help only four-five people for gaining personal laurels from handful of people. It is a matter of entire country," said Banerjee.

"Everybody should think about the common masses of the country rather than the creamy section of the society. Because creamy section makes one percent and common masses make the rest 99 percent of the population," she said.

The government Thursday announced a hike in diesel price by Rs.5 a litre and capped supply of subsidised cooking gas cylinders per family to six per year. The next day, it decided to allow up to 51 percent foreign direct investment (FDI) in multi-brand retail.

The entire industrial community has hailed Manmohan Singh's - who has often been credited as the father of economic reforms of 1991 - bold decisions to allow FDI in retail FDI and to hike diesel price.


 


 

 
 


 


 



 

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