Difficulty in inflation control, growth to be tad better: PM

Difficulty in inflation control, growth to be tad better: PM

Last Updated: Thursday, August 16, 2012, 09:08
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Difficulty in inflation control, growth to be tad better: PM
New Delhi: Amid mounting concerns over price rise and slow growth, Prime Minister Manmohan Singh today offered little cheer to the common man, saying bad monsoon will pose some difficulty in curbing inflation.

In his Independence Day speech, Prime Minister said the country's economic growth has been affected due to global slowdown and problems within the country.

"Last year our GDP grew by 6.5 percent. This year we hope to do a little better," he said. The country's GDP growth fell to a nine-year low in 2011-12.

Emphasising that inflation must be controlled, Singh said bad monsoon would play a spoil-sport. "...We must control inflation. This would pose some difficulty because of a bad monsoon this year," he said.

Monsoon rains have been 16 percent lower so far affecting sowing of crops. Prices of food articles remain stubbornly high in the face of drought-like-condition in several states.

Singh conceded that the country has not been able to create a conducive environment for achieving rapid economic growth because of lack of political consensus on many issues.

In a message to political parties, he said: "Time has now come to view the issues which affect our development processes as matters of national security".

As the coalition UPA government has not been able to implement several key reforms like foreign investment in multi-brand retail and liberalising the insurance, banking and pension sectors, it faces criticism of policy paralysis.

Singh cautioned if the economic growth is not increased, new investments are not encouraged, and livelihood security of the common man and energy security are not ensured, "then it most certainly affects our national security".

He emphasised that "we have to create confidence at the international level that there are no barriers to investment in India".

Although overall inflation fell to 6.87 percent in July, from 7.25 percent in June, the rate of rise in food prices was above 10 percent. While prices of vegetables were up 24 percent - on annual basis - eggs, meat and fish spurt 16 percent and pulses became costlier by 28.26 percent.

On drought-like conditions in some parts of the country because of deficient monsoon rains, Singh said the government has taken steps to deal with the situation and assured that the government has huge foodgrain stock.

"Our effort is to ensure that people do not face difficulty due to shortage of seeds, fodder or water in any part of the country. It is good that we have a big stock of foodgrains...And availability of foodgrains is not a problem," he added.

Singh said diesel subsidy is being provided to farmers in districts where there has been a rain deficit of 50 percent or more. That apart, the government has enhanced seed subsidy and allocated higher funds to boost fodder supply.

Recently, the EGoM on drought has approved about Rs 2,000 crore primarily to four states (Karnataka, Maharashtra, Gujarat, Rajasthan) facing drought-like conditions.

On power supply, the Prime Minister said the target is to provide electricity to every household in the next five years and announced that steps will be taken to augment investment in infrastructure sector with the help of private sector.

The Prime Minister also informed that the 12th Five Year Plan would be considered by the National Development Council this year that suggests steps for raising the economic growth from 6.5 to 9 percent in the last year of the Plan (2016-17).

Singh also announced that to provide housing to urban poor, his government would soon launch the Rajiv Housing Loan Scheme, under which economically weaker sections would be given relief on interest on home loans of less than Rs 5 lakh.

He further said the government intends to create a system in which money from government schemes - pension for old people, scholarship for students and wages for labourers - can be credited directly into beneficiaries' bank accounts.

On economic growth, Singh said his government will work hard for achieving rapid increase in GDP and for shielding the country from the effects of the global economic slowdown.

The 6.5 percent GDP growth in 2011-12 was the lowest in nine years. The government's original GDP projection for 2012-13 was 7.6 percent.

A host of major private forecasters including Citi, CLSA, Crisil and Moody's trimmed their forecast to as low as 5.5 percent citing inaction on the policy front as one of the reasons for the slowdown in economic activities.

Singh said the global economy is passing through a difficult phase and has adversely affected India as well.

Besides on the domestic front, he said lack of political consensus on many issues was impeding rapid economic growth.

"We will make every possible effort to secure the livelihood of our workers and our farmers. We will leave no stone unturned to encourage investment into our country so that our entrepreneurs can make a substantial contribution to our economy," he said.

While not much can be done about the conditions prevailing outside, Singh said every effort must be made to resolve the problems inside the country to again speed up economic growth.

India's GDP grew by over 9 percent for three years before the 2008 global economic crisis.


First Published: Wednesday, August 15, 2012, 09:17


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