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India BREAKING NEWS: Growth Needs Hard Decisions: PM

Jan 6, 2005
Metro-Vancouver, B.C., Canada
BREAKING NEWS: Growth needs hard decisions: PM

Express news service : New Delhi , Fri Sep 21 2012, 21:59 hrs


SEEKING the people’s trust, understanding and co-operation, Prime Minister Manmohan Singh Friday justified the government’s decisions to raise diesel prices, cap subsidised cooking gas cylinders and allow FDI in multi-brand retail saying they were unavoidable to ensure the country remained on a growth trajectory.

Addressing the nation over television hours after the Trinamool Congress pulled out of the UPA protesting against the reforms, Singh signaled his determination to stick to last week’s announcements by emphasising that no government wanted to burden people but “hard decisions” had become necessary to protect the interests of the nation.

“At times, we need to say no to the easy option and say yes to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this I need your trust, understanding and your cooperation,” he said.

Singh said that the task became even more challenging given that the world economy is facing difficulty with the US and Europe struggling to deal with the economic slowdown and financial crisis. He said India was at a juncture where it needed to revive investor confidence domestically and globally and the decisions taken were necessary for this purpose.

Referring to the diesel price increase, the Prime Minister said “money does not grow on trees” as he underlined that the government could not continue subsidising petroleum products. He maintained that most of the rise in global oil prices was never passed on to the consumer, but this had led to the subsidy on petroleum products increasing significantly. “It was Rs 1 lakh 40 thousand crore last year. If we had not acted, it would have been over Rs 2 lakh crore this year,” he said.

Singh, however, pointed out that the total subsidy on petroleum products was still more than what was being spent on health and education together. The inaction would have resulted in a higher fiscal deficit, which would mean 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. The prices of essential commodities would rise faster.

Both domestic as well as foreign investors would be reluctant to invest in our economy. Interest rates would rise. Our companies would not be able to borrow abroad. Unemployment would increase,” he said, trying to present a picture of the potential disaster.

The Prime Minister said that the country had faced a similar problem in 1991 and it came out of that crisis only by taking “strong, resolute steps”. He pointed out that several European countries were not in a position to pay their bills and were looking to others for help. “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,” he said.

On the cap imposed on subsidised LPG cylinders, Singh argued that half of the country belonging to the underprivileged classes used only six cylinders or less every year. “We have ensured that they are not affected. Others will still get six subsidised cylinders, but they must pay a higher price for more,” he said, adding that the government had not raised the price of kerosene.

Justifying the decision to open the retail market to foreign players, Singh maintained that the decision would benefit farmers while bringing down prices for consumers without hurting small traders. “In a growing economy, there is enough space for big and small to grow. The fear that small retailers will be wiped out is completely baseless,” he said.

Singh maintained that his government recognised the opposition by some political parties to the government decision, which was why they had decided to allow states to decide on implementing the move. He pointed out that similar fears were expressed in 1991 when India allowed foreign investment in manufacturing, but they have been belied today with Indian companies competing effectively both at home and abroad.

source: http://www.indianexpress.com/news/growth-needs-hard-decisions-pm/1006051/0



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