New Delhi: Prime Minister Manmohan Singh on Friday addressed the nation to explain the government's recent decisions on 'big bang' economic reforms which have triggered widespread political protests across the country.
Singh spelled out the reasons that prompted the government to allow FDI in multi-brand retail, hike in diesel prices and put a cap on subsidy on LPG cylinders.
Warning against the country slipping back into 1991 economic crisis, Prime Minister said time has come for "hard decisions" to put the country on the path of high and inclusive growth.
Seeking trust and understanding of the people in a televised address to the nation, he asked them not to be misled by those who want to confuse them by spreading fear and false information like they did unsuccessfully in 1991.
Speaking against the backdrop of Trinamool Congress withdrawing support to the government on FDI and diesel price hike and the opposition from other parties, Singh said, "we have much to do to protect the interest of the nation and we must do it now.”
"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," he said.
"For this, I need your trust, your understanding and your cooperation," he said justifying the Rs 5 hike in diesel price, cut in sup-ply of subsidised LPG cylinders and allowing FDI in multi-brand retail.
Referring to the ballooning oil subsidy which would have touched Rs 2 lakh crore this year, up by Rs 60,000 crore last year, he asked where would the money for this have come from.
"Money does not grow on trees. If we had not acted, it would have meant a higher fiscal deficit. That is an unsustainable increase in government expenditure vis-a-vis government income," he said.
The prices of essential commodities would rise further. 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 and unemployment would increase, he said.
"I am determined to see that India will not be pushed into that situation," he said, adding, "But I can succeed only if I can persuade you to understand why we had to act."
On the diesel price hike, he said it was done by just Rs 5 a litre instead of Rs.17 that was needed to cut losses on diesel.
"Much of diesel is used by big cars and SUVs owned by the rich and by factories and businesses. Should government run large fiscal deficits to subsidise them?" he asked.
On the annual cap on subsidised LPG cylinders, he said, "almost of our people, who need our help the most, actually use only 6 cylinders or less. We have ensured they are not affected. Others will still get 6 subsidised cylinders, but they must pay a higher price for more."
Highlight of PM's address to the nation
- You have all the rights to know as to why we took such a harsh decision
- No government wants to burden the common man
- Must ensure that our economy develops at a faster pace
- Will like to discuss about LPG and diesel
- We have not passed on the burden of escalating oil prices upon the common man
- Last year the burden of subsidy was at Rs 1,40,000 crore, had we not taken reform measures the subsidy burden would have escalated to 2 Lakh crore
- We need to contain inflation and subsidy
- We need revival in investors’ confidence globally and internationally
- Money does not grow on trees
- We have capped the LPG at 6 per year to ensure that we can cater to the need of the lowest strata of the society
- Diesel subsidy stands at 17 lakh, we just hiked price by Rs 5 per litre
- We have left kerosene prices untouched because that is the poor man’s fuel
- Diesel is widely used in SUVs, it is unfair to subsidise it
- Our fuel prices much less than Bangladesh, Nepal, Pakistan and Sri Lanka
- FDI in retail will benefit Farmers
- Not correct to say that small farmers will be affected by FDI in retail
- We know that political parties do not concur with us on FDI in retail, so we have left upon them to decide the module of FDI in their state
- In a growing economy there is scope for both big and small to thrive
- Those who bring FDI in India will have to spend 50 percent on cold-storage, manufacturing units.
- Prices paid to farmers will go up and prices paid to consumers will go down
- FDI will create millions of Jobs
On India’s economic condition
- We must take chart of India’s economy to newer levels of growth
- In the past few years India has registered high growth rate
- I promise I will do every possible thing to put India's economy to the path of growth
- Need your faith and support
- Don’t be hoodwinked by detractors on the growth model
- Have faith upon the the wisdom of people of India
- At times we must say yes to the more difficult options and no to the easy option
- I ask each one of you to strengthen my hand and take India to better economic growth
- We must embark upon difficult roads at times to sail the storm
- For a better posterity I need your support
With PTI Inputs