M A I N   N E W S

Time for hard decisions, says Manmohan
PM strongly defends reforms, says need to revive investor confidence
KV Prasad/TNS

New Delhi, September 21
Seeking to address the concerns of the ‘aam aadmi’ and re-inforce his government’s commitment to protect their interests, Prime Minister Manmohan Singh today emphasised that the fresh dose of reforms was required as it was time to take tough decisions given the global economic slowdown.

Juxtaposing the need for India to maintain rapid economic growth with inclusiveness against the backdrop of a global crisis affecting even the United States, Europe and China, the Prime Minister said, “We need to do more and we will do more.” He warned that a 1991-like situation could emerge unless tough action was taken to correct the situation.

“We are at a point where we can reverse the slowdown in our growth. We need a revival of investor confidence domestically and globally. The decisions we have taken recently are necessary for this purpose,” Dr Singh said in his live televised address to the nation on prime time.

He also sought to assuage the fears of the people that the recent hike in diesel, cap on supply of cylinders and allowing FDI in retail will render a blow to the household budgets and wipe out small retail trade.

The PM’s address came on a day when UPA ally Trinamool Congress snapped ties with the ruling coalition and a day after political parties across the spectrum opposed and challenged these decisions through a nation-wide strike. The message was clear: the Government will stand firm.

Cautioning that a 1991-like situation could emerge unless tough measures were taken to address the current economic situation, the Prime Minister reminded that he knew what happened in 1991 when nobody was willing to even lend small amounts of money to India.

Dr Singh introduced a personal note asserting, “I would be failing in my duty as Prime Minister of this great country if I did not take strong preventive action.” At the same time, he said, the economy was not in that situation but the Government must act before people lose confidence in India’s economy.

Countering the campaign against these measures, he asked people not to be “misled” by those who want to confuse and spread fear and false information tactics adopted even in 1991. “They did not succeed then. They will not succeed now. I have full faith in the wisdom of the people of India.”

On the diesel price hike, he said India imported almost 80 per cent of its oil and prices in the world market have risen sharply during the last four years during which the Government protected the people from hardship to the maximum extent possible.

The current subsidy on petroleum products stood around Rs 1.4 lakh crore last year and would have bloated by another Rs 60 lakh crore had steps not been taken. “Where would the money for this have come from? Money does not grow on trees,” he said, justifying the action stating otherwise it would have led to further rise in prices of essential commodities, rise in interest rates resulting in companies not being able to borrow overseas and spike in unemployment.

Providing the rationale for the Rs 5 diesel price rise instead of Rs 17 needed to cut all losses, the Prime Minister said much of this fuel was used by big cars and SUVs owned by the rich and by factories and business and sought to know whether the Government should run such large fiscal deficits to subside them.

Similarly, he said, half the people who need help would get six subsidised LPG cylinders per year and the others will also get the same benefit, but have to pay a higher price for more. He reminded that the Government did not touch the price of kerosene, which is used by the poor, and tax on petrol was reduced by Rs 5 a litre so that crores of middle class who drive scooters and motorcycles were not hit further.

On FDI in retail, he said organised modern retailing was already present and growing in the country with such chains in all major cities. Inspite of new shopping centres in Delhi, there has been three-fold increase in small shops in recent years, he said, adding that there was enough space for the big and the small in a growing economy. “The fear that small retailers will be wiped out is completely baseless.”

Identifying distinct features of the policy, he said while States have the flexibility, 50 per cent of FDI will have to be in building new warehouses, cold-storages and modern transport systems that would help prevent wastage of a third of the country’s fruits and vegetables. While wastage would go down, it would benefit both farmers and consumers, he said.

Manmohan’s straight talk

  • We must act before people lose confidence in our economy
  • …to protect the interests of our nation, we need to say 'no' to the easy option and say 'yes' to the more difficult one
  • We are at a point where we can reverse the slowdown in our growth

On retail FDI fears

In a growing economy, there’s space for both big and small. The fear that small retailers will be wiped out is completely baseless

On hike in fuel prices

  • We need to contain subsidies as money doesn't grow on trees
  • The prices of diesel and LPG in India are lower than those in Bangladesh, Nepal, Sri Lanka and Pakistan.





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