Under attack for high food prices and slow reforms, Prime Minister Manmohan Singh today said the UPA has not given up its economic agenda and promised clear measures in the upcoming Budget. Exuding confidence that inflation rate should be “no more than 7 per cent” by March-end from 8.23 per cent in January, Singh said the government’s effort has been to rein in high prices without hurting growth, which he projected to be at 8.5 per cent this fiscal.
Addressing electronic media editors here, Singh said global factors like high crude and food prices were not under the control of the government and that efforts were being made to insulate the poor through programmes like NREGA and keeping prices at state-run ration shops unchanged since 2002.
“We want to deal it (inflation) in a manner that the growth rhythm is not disturbed. If we were concerned only in curbing inflation we could have done with pursuing tighter monetary policies…if in the process the growth rate gets hurt that would not do our country any good,” he said.
Rejecting criticism that the government has given up on economic reforms, the Prime Minister said: “We will persist… I sincerely hope in the (upcoming) Budget we will see a clearer picture of the reform agenda.”
He, however, blamed the Opposition for not cooperating with the government on “path breaking reforms on Goods and Services Tax (GST)”. The Opposition, “particularly the BJP, has taken a very hostile attitude,” he said.
For the introduction of GST, the Constitution Amendment Bill has to be passed by a two-third majority in both houses of Parliament and ratification by at least 15 State Assemblies.
The draft of GST, which subsumes most of the state and central taxes, is being opposed by NDA ruled states. Indicating big initiatives for infrastructure development in the Budget, Singh said: “I believe we are going to have a fresh wave of infrastructure investment with the help of PPP (public-private partnership) model.”
Stating that discussions are going on to create a infrastructure development fund, he said Finance Minister Pranab Mukherjee may make some announcements. “Some discussions are going on…and most probably, Finance Minister will outline something in that direction.”
India needs investment to the tune of over one trillion dollars in the 12th five year plan (in 2012-17) to sustain a growth rate of 8-9 per cent. When asked from where the country would mop up resources, he said: “We must create a viable corporate debt market. I think that is the direction in which we must move.”
Commenting on the drop in FDI, Singh admitted there was a need for “favourable” environment for fund flow from abroad. “We need to strengthen the resolve to create favourable environment for larger flow of funds from abroad,” he said.
The Prime Minister said government policies could not be blamed for the current drop in FDI as the current international scenario was prompting foreign funds to move out from emerging markets
“I think we need to strengthen the resolve to create favourable environment for larger flow of funds from abroad”, he said. During April-December of the current fiscal, FDI inflows declined by 23.14 per cent to USD 16.03 billion over the year ago period.
The Prime Minister also said that discussions are going on to create a infrastructure development fund and Finance Minister Pranab Mukherjee may make some announcements in this direction.
Singh also assured the government has not given up on reforms and that more reforms could be unveiled in the forthcoming Budget. “No, we have not given up on reforms. We will persist… I sincerely hope in the (upcoming) Budget we will see a clearer picture of the reform agenda,” Singh said.
He reiterated that the government has been working on a host of reform initiatives, some of which have already been successful. “We are working on a Food Security Bill The Right to Education is now a reality… The ICDS (Integrated Child Development Services) is a reality… and also the National Rural Health Mission,” Singh said.