On Board PM's Special Plane: Prime Minister Manmohan Singh on Wednesday expressed confidence that inflation would come down by the year end and the country will have high growth of 8-8.5 percent despite adverse global economic situation.
He said the government will have to use all instruments, including monetary and fiscal measures, to ensure "credible price behaviour" and ensure steady flow of investments to prevent any adverse impact of the economic crisis in Europe on India.
Noting that the 12th Five Year Plan has the targetted economic growth of about 9 percent, Singh said "it is difficult in the present world situation" but he believed it is achievable if more emphasis is laid on development of infrastructure, health and skill development.
Talking about inflation, he said the meeting he had held last Saturday with top officials, including Planning Commission Deputy Chairman Montek Singh Ahluwalia, RBI Governor Subbarao and PMEAC C Rangarajan was aimed at discussing steps that could be taken to check price rise.
"The purpose of that meeting was to explore ways and means of how we can bring about a moderation in the rate of inflation," he told journalists accompanying him back home from Pretoria after a three-day visit.
The purpose of that meeting was to "understand from the experts in the Government of India the various forces which are at work, which have been fuelling inflation, and how we can bring inflation under control," the economist-Prime Minister said.
Giving an overview of how the government planned to curb inflation, Singh said, "we have several instruments, the monetary policy instruments, the fiscal policy instrument, public distribution instruments. We have to use all these instruments together to bring about a credible price behaviour."
Asked when an impact of these measures could be felt, he replied, "Well I am confident by the end of the year you would see some positive results."
He said factors, both on the side of demand and on the side of supply, have led to "an inflationary environment".
The international environment has also not been very helpful because of the energy price rise, and the fact that the exchange rate has recently depreciated, Singh said, adding that complicates the task of controlling prices.
On criticism of the RBI's monetary policy, the Prime Minister refused to comment, saying it would not be proper on his part as the subject is the "preserve" of the Reserve Bank.
Asked about the impact of economic crisis in Europe and other developed countries on India, he said, "we have to ensure that the ill winds from abroad do not affect the growth processes in our country adversely, and for that it is very essential that we maintain the tempo of investment, particularly investment in the infrastructure sector, investment in agriculture, investment in energy saving technologies."
Singh said he was confident that "just as in the year 2008 we showed to the world that we can swim against the wind blowing from abroad, it is still possible for India to maintain a healthy growth rate of about 8 to 8.5 percent despite the adversity of the international environment."
He said India will have to "walk on several legs" to achieve the "most important task" of getting rid of chronic poverty, ignorance and disease which still afflict millions and millions of people in the country.
Queried whether he was worried that the protests witnessed in the Wall Street and Europe could be replicated in India, he said peaceful protests are a "part of functioning of any democratic polity."
He said there are reasons why people are protesting in Wall Street and in Europe, which are fat salaries that the bankers are getting when people are being asked to tighten their belts.
"There is problem of growing unemployment in United States. There is also worry in Europe also. So, these are problems which the system must have credible answers to take them on board," he said.
"I think democracy that way provides outlet for people’s frustrations, which I think is a very timely warning, for all those who are in charge of the processes of governance," he said.
About his expectations from the Cannes Summit of G-20 countries taking place early next month, the Prime Minister said the developed countries, particularly the Eurozone countries, ought to come up with "credible measures" to resolve the crisis of the sovereign debt "which now is becoming a major global concern".
First Published: Thursday, October 20, 2011, 00:32