Forced to put on hold key policy reforms including FDI in multi-brand retail, Prime Minister Manmohan Singh Monday said difficult decisions were need to revert to 9 percent growth trajectory as the path ahead is not easy.
New Delhi: Forced to put on hold key policy reforms including FDI in multi-brand retail, Prime Minister Manmohan Singh Monday said difficult decisions were need to revert to 9 percent growth trajectory as the path ahead is not easy.
"We grew at 9 percent for five years before 2008, and I do believe that we can get back to that kind of growth rate provided we can agree on a number of difficult decisions," he said replying to the debate in the Lok Sabha on Motion of Thanks to the President for her address.
Although Singh did not elaborate on the difficult decisions, the critical policy actions on which the government has not been able to take any action because of political compulsions include opening of the multi-brand retail to foreign investment, deregulation of diesel prices, raising FDI cap in insurance sector and pension and tax reforms.
Singh also sought support from political formations to raise economic growth rate saying "we need a broad-based national consensus covering all sections of political opinion represented in this august House."
He said that 12th Plan, to be placed before the National Development Council (NDC) around mid-year, will lay out a credible plan of action for faster, sustainable and more inclusive growth. "I do not wish to go into details, but only wish to remind the members that our path is not easy."
Indian economy used to grow by over 9 percent before the global financial meltdown pulled it down to 6.7 percent in 2008-09. The growth in the current fiscal is likely to moderate to three-year low of 6.9 percent, down from 8.4 percent in the two preceding years. For the next fiscal, the government expects a growth of 7.6 percent.
The Prime Minister said coalition compulsions have made it difficult for the government to take hard decisions.
"...the difficult decisions that we have to take are made more difficult by the fact that we are a coalition government and we have to evolve policy keeping in mind the need to maintain a consensus," he said, adding the challenges came to fore after presentation of the Railway Budget.
Railway Minister Dinesh Trivedi, belonging to UPA ally Trinamool Congress had to quit as his party leadership was not happy with the rail budget.
Referring to the difficult global economic situation, Singh said, "We are chartering our course through waters that are choppy for all countries today...The international economic environment that we face is highly uncertain.
"...our own economic performance of about seven percent growth -- though slower than what we had hoped -- must be regarded as commendable", he said, adding "we cannot view this as acceptable. We must strive to improve upon this in the next year and return as quickly as possible to a higher growth path...with reasonable price stability".
Though the government had initially projected a growth rate of 9 percent for 2011-12, it has now been estimated at 6.9 percent.
Singh said developments in North Africa and West Asia have led to a steep increase in the prices of hydrocarbons and are adversely affecting fertilisers and food grains prices, besides impacting balance of payment position.
As regards the price situation, the Prime Minister said, inflation, which has remained high during the last two years had come under control but "we have to be vigilant."
Singh said efforts of Finance Minister Pranab Mukherjee to contain fiscal deficit would help in improving the price situation.
Mukherjee had pegged the fiscal deficit for 2011-12 at 4.6 percent of the Gross Domestic Product (GDP), but it turned out to be 5.9 percent, as per the revised estimates.
Lauding the efforts of Mukherjee to bring down the fiscal deficit to 5.1 percent in the next financial year, Singh said, "It is essential for us to achieve our objectives of growth with reasonable price stability."
Referring to agriculture sector, Singh said, government has attached high priority to raising public investment in the farm sector.
The efforts of the government, he said, have helped in raising agriculture output to 3-3.5 percent. "This year we are likely to achieve a record production of foodgrains of 250 million tonnes," he added.