New Delhi : Prime Minister Manmohan Singh on Friday strongly defended his government’s fresh economic reforms, saying “hard decisions” were needed to boost investor confidence domestically and globally.
In a nationally televised address, the prime minister hit out at the opposition of misleading the country and urged the people to have trust in his leadership.
“The time has come for hard decisions. For this I need your trust, your understanding and your cooperation,” he said, comparing the situation with 1991 when India embraced sweeping economic reforms.
PTI
“We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence domestically and globally,” he said. “The decisions we have taken recently are necessary for this purpose.”
The prime minister’s speech came hours after the Trinamool Congress quit his government over the decisions to hike diesel prices, cap the supply of cooking gas cylinders and allow FDI in multi-brand retail trade.
In his speech, Manmohan Singh defended all three decisions.
He said that subsidy on petroleum products had grown enormously, and would have been over Rs.200,000 crore this year.
“If we had not acted, it would have meant a higher fiscal deficit, that is, an unsustainable increase in government expenditure vis-a-vis government income.
“If unchecked, this would lead to a further steep rise in prices and a loss of confidence in our economy.”
He said India had faced a similar situation in 1991 when “nobody was willing to lend us even small amounts of money”.
“We are not in that situation today, but we must act before people lose confidence in our economy.”
On the decision to limit to six the number of cooking gas cylinders a family can get each year, the prime minister said that “almost half of our people … actually use only six cylinders or less”.
“We have ensured they are not affected. Others will still get six subsidised cylinders, but they must pay a higher price for more,” adding the price of kerosene, the poor man’s fuel, remained unchanged.
Manmohan Singh denied accusations that allowing foreign direct investment in retail would hurt small traders. “This is not true.”
He said that organised and modern retailing was already present in India and growing.
In Delhi, he said, despite the increasing number of shopping centres, there was a three fold increase in the number of small shops.
“The fear that small retailers will be wiped out is completely baseless.”
The speech, in Hindi and English, came a day after parts of India shut down in response to calls from anti-Congress political parties opposed to the economic decisions.
The economist-turned-politician said the people of India “have a right to know the truth about why we have taken these decisions”.
The US and Europe, he said, were struggling to deal with an economic slowdown and financial crisis. Even China was slowing down. India too had been affected but not majorly.
“The world is not kind to those who do not tackle their own problems. Many European countries are in this position today.”
“I am determined to see that India will not be pushed into that situation. But I can succeed only if I can persuade you to understand why we had to act.”
Manmohan Singh said that in the last eight years, Indian economy had grown at a record annual rate of 8.2 percent.
“I promise you that I will do everything necessary to put our country back on the path of high and inclusive growth. But I need your support.
“Please do not be misled by those who want to confuse you by spreading fear and false information. The same tactics were adopted in 1991. They did not succeed then. They will not succeed now.”
Manmohan Singh said a Rs.17 per litre hike in diesel price was needed to cover the losses and that the government only partially passed on the burden to the common people.
“We raised the price of diesel by just Rs.5 per litre instead of the Rs.17 that was needed to cut all losses on diesel,” the prime minister said in an address to the nation.
The prime minister pointed out that much of diesel is used by big cars and sports utility vehicles (SUVs) owned by the rich and by factories and businesses.
“Should the government run large fiscal deficits to subsidise them,” he asked.
The prime minister said taxes on petrol were reduced by Rs.5 per litre to prevent a rise in petrol prices.
“We did this so that the crores of middle class people who drive scooters and motorcycles are not hit further.”
On the decision to put a cap of 6 subsidised cylinders per year, Singh said, “Almost half of our people, who need our help the most, actually use only 6 cylinders or less. We have ensured they are not affected.”
“We did not touch the price of kerosene which is consumed by the poor,” he said.
He said despite the recent increase, diesel and cooking gas prices were lower in India than neighbouring countries like Pakistan, Sri Lanka, Bangladesh and Nepal.
“The total subsidy on petroleum products will still be Rs.160 thousand crore. This is more than what we spend on health and education together. We held back from raising prices further because I hoped that oil prices would decline,” he said.
IANS
