Difficulties in coalition, allies will be consulted: PM

Asked whether allies like Mamata Banerjee were on board in the government's reforms process, he said "well, I think these are compulsions of managing a coalition.

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Difficulties in coalition, allies will be consulted: PM


With UPA constituent Trinamool Congress stiffly opposing decisions like FDI in retail and rail fare hike, Prime Minister Manmohan Singh today admitted "difficulties" in managing the coalition and said allies will be consulted whenever "tough" decisions are taken.

He said the government was committed to bringing about faster, equitable, sustainable and more inclusive growth at the rate of 8-9% while ensuring that there is no "slip on our obligations" to moderate the price rise.

"Right now, the challenge before the country is to accelerate the tempo of economic growth," Singh said while commenting on the general budget and said Finance Minister Pranab Mukherjee had tackled these well.

Asked whether allies like Mamata Banerjee were on board in the government's reforms process, he said "well, I think these are compulsions of managing a coalition.

"There will be difficulties. There have been difficulties but ultimately if the government is to govern, it must have a sustainable strategy of managing the economy. I sincerely hope when the time comes to take relevant decisions which are tough, we will consult all our allies and take them on board."

The statement assumes significance as it comes against the backdrop of stiff opposition by Trinamool to reform measures like allowing FDI in multibrand retail and raising railway passenger fares.

In view of Trinamool opposition, the proposal to allow 51% FDI in multi-brand retail has been put on hold.

To a question on decline in GDP growth which now stands at 6.9%, the Prime Minister said "right now, the challenge before the country is to accelerate the tempo of economic growth and at the same time to ensure that we do not slip on our obligations to moderate the price-rise."

He said both these tasks had been tackled well by the Finance Minister in the Budget.

With regard to Mukherjee's emphasis on controlling subsidies to bring these to the level of 1.7% of GDP in the next three years, the Prime Minister said that would require the government to put forward an effective programme for adjusting the prices of petroleum products and adjusting other relevant prices.

"So, we have to bite the bullet. There is no other way in which you can reduce subsidies," he said.

Asked if there was anything in the budget that promises to help contain inflation, Singh said the biggest single thing that fiscal policy can do in controlling inflation is by controlling the fiscal deficit.

Fiscal deficit in the current year has turned out to be as high as 5.9% and the Finance Minister has promised to bring it down to 5.1 of GDP, he said.

"If that happens, that would be a material contribution to stabilizing the price level, also, reducing the extent of crowding-out, that invariably follows if government borrowing goes haywire," the economist-Prime Minister explained.

Singh said it was the "the biggest achievement" of the government that the growth rate of Indian economy had been protected despite the problems witnessed in rest of the world.

"We are still in the league of front runneRsin the growth movement," he said.

Pointing out that amidst the global financial crisis, the country's economic growth fell to 6.5 per cent in 2008-09, the Prime Minister said it reverted to 8.4 per cent in 2009-10 and remained so in the next fiscal.

"This year again, it has slipped but the challenge is to get it back to the path of 8 and 9 per cent and that's the task that this government has set for itself," he said.

Singh said the budget was an important instrument of macro economic policy and faster equitable, sustainable and more inclusive growth.

When pointed out that nutrient-based subsidies had been extended to phosphates and potassium and not urea which created a huge demand in Rabi season, Singh said "there is a general agreement that we should have a rethink on subsidy for all the three.

"But it is deliberately felt that the time when international prices of urea were increasing, it would, I think, be wise to go slowly towards the nutrient-based subsidies and decontrolling urea as well. So, I think it is a question of timing," he said.

At the same time, the Prime Minister said, "there are, I think, compulsions which require that the government will have to take sensible decisions which may not be very popular."

When referred to the controversies surrounding ADHAAR scheme, he said "there may be controversies and there are controversies in these sort of things all over the world but we have, I think, begun and we will use the modern technological devices to cut out leakages in delivery mechanism of various public sectors."

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