PM defends performance on economic front, assures steps on prices

Prime Minister Manmohan Singh today strongly defended his Government's performance on the economic front and assured the people that it would take all possible practical measures to curb rising prices.

"I recognise that there are certain problems which cannot be wished away," he said, referring to the spiralling food prices in the last one year, while replying to the debate in the Lok Sabha on the motion of thanks to the President for her address to a joint sitting of both Houses of Parliament.

Dr Singh said the rising prices were a be-product of events which were not in the Government's control. He referred to the increase in international commodity prices and pointed out that India still depended on imports of vegetable oils, sugar and pulses.

He said that when international prices of rice and wheat soar, it becomes necessary to ensure remunerative prices for farmers, which then raise the floor prices of market-determined prices.

He said there was a global recession simultaneously and because of the drought and because of cmmodity prices worldwide there was pressure on the prices.

Dr Singh said the Government could have dealt with the rising prices with a very tough monetary and fiscal policy which could have depressed demand, but that would have led to large-scale unemployment and a steep fall in industrial production in the country.

"At a time, when the world is faced with global economic crisis, we have so managed our economy then the price that we had to pay was in the form of higher prices. We have not allowed large-scale unemployment to emerge as a problem in our country despite the worldwide recession that we had," he said.

He said the Government was, at the same time, able to introduce a large number of stimulii which ensured that the interests of the weaker sections were protected. He mentioned in this regard the Government's flagship programmes such as the National Rural Employment Guarantee Scheme.

He asserted that, if the country used all the resources of the economy to step up the growth rate and managed the fiscal situation well, the harsh edges of extreme poverty could be softened in another five years.

Dr Singh said the Government needed to invest more in rural and urban infrastructure. "Please help us to strengthen the growth impulses in our economy so that we can accelerate the tempo of social and economic change," he said.

He said growth was important not in itself but because it provided the country with resources to tackle the problems of poverty, ignorance and disease.

He said the country had, in 2009 one of the most severe droughts in recent history which adversely affected the production of foodgrains, pulses, oilseeds and sugarcane. This was preceded by the global economic slowdown, to which the Government had to stimulate demand and increase the availability of bank credit. He went on to give details of the steps taken by the Government to tackle the situation.

"There should be no panic on the food situation front considering the comfortable level of food stocks that are available with the Central Government. Rabi prospects are also very encouraging. Post-monsoon rains have been good. All this augurs well for our ability to stabilize food prices at a reasonable level. We have permitted import of raw and white sugar at zero duty and imports are taking place," he said.

Dr Singh said enforcement in terms of imposing stock and time limits is in the hands of the State governments. The Centre had empowered the State Governments to do so through the Essential Commodities Act and he had requested the Chief Ministers to take stern action against hoarders.

He said the Government's pro-farmer policies had borne fruit. For the first time in the recent past the Government had reversed the trend of declining investment in agriculture through schemes such as the Accelerated Irrigation Benefit Programme, the Rashtriya Krishi Vikas Yojana, the National Food Security Mission, the National Horticulture Mission, and so on.

He said food production had increased from 174 million tonnes in 2002-03 to 233 million tonnes in 2008-09, which represents a growth rate of around 6 % per year.

Dr Singh said that much more needed to be done to improve agricultural productivity and the Government was committed to continuing its efforts to increase both public and private investment in the sector and also encourage diversification.

He said the Government had been very sensitive to the issue of farmers' suicides and everything possible was being done to ameliorate agrarian distress. He mentioned various steps taken in this regard, including the waiver of farm loans.

The Prime Minister said the Government had accorded very high priority to the welfare of the minorities and spoke at length about the special progrmmes aimed at their social, economic and educational development. He also dwelt at length on the measures taken for the welfare of the tribals.

On the issue of black money deposited in foreign countries, he said the government had prioritised 20 countries and jurisdictions for entering into agreements regarding exchange of information and assistance in the collection of taxes. Negotiations have been completed with the Bahamas and Bermuda, and steps are being taken for signing of agreements, he said.

Dr Singh said India had also approached Switzerland for renegotiation of the bilateral tax treaty, so that India could have access to bank information.

"Negotiations were held in November 2009, and the matter is being pursued for finalizing a new protocol, through which we will be able to obtain information in specific cases. India is an active participant in global fora for improving transparency and exchange of information on tax matters," he said.

On the issue of One Rank, One Pension to ex-servicemen, he said Mr Advani was not correct in saying that the promises made by him in his Independence Day speech and the Finance Minister in his budget speech of July 6, 2009 had not been honoured.

"The factual position is that we had constituted a Committee under the Cabinet Secretary to look into the issue of One Rank One Pension and other related matters. The Committee did not recommend One Rank One Pension. But whatever recommendations the Committee made to substantially enhance the pensionary benefits of persons below officer rank and commissioned officers were accepted by the Government and this is what I had stated in my Independence Day speech. The recommendations which have been accepted cover what the Finance Minister had promised in his budget speech of 2009. Of the seven recommendations that the Committee made, five have been implemented. The two recommendations which have not been implemented will be implemented very soon," he said.

On the economy, Dr Singh said the the whole world was praising India for the success it had achieved against the twin impact of the international financial crisis and the failure of the South West monsoon.

He said India was likely to achieve a growth rate of 7.2 per cent and possibly 7.5 per cent in 2009-10. "In the next fiscal year, I am confident of achieving a growth rate of 8 per cent or more and the year there after, we will be able to return the economy over 9 per cent growth," he said.

He said the sharp increase in growth rate achieved by the UPA Government in its first term enabled it to devote a lot of resources to rural and agricultural development and for education. "And therefore it is very important that the economy should get back to the growth rate of 9 per cent or more," he said.

In this context, he pointed to the fact that the savings and investments in India were now equal to the savings and investment rates which prevailed until ten years ago only in the countries of South East Asia or East Asia.

He said that in the two decades ahead the divident arising from the sharp rise in working age population would provide another positive factor to push the savings rate of the country close to 40 per cent of national income.

"If we manage our economy well, if we manage the creation of social and physical infrastructure well, if the processes of governance are improved to reduce the scope for corruption, there is no I think barriers to India entering on a long-term basis, the age of double digit growth. This is the vision that our Government is working to realize," he added.

NNN