New Delhi: Reviving confidence of domestic and foreign investors is necessary to reverse the economic slowdown and prevent recurrence of 1991-type of crisis, Prime Minister Manmohan Singh said Friday.
"We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence, domestically and globally. The decisions we have taken recently are necessary for this purpose," Singh said in his address to the nation.
The government need to do more and we will do more, he said.
"But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficit which causes a loss of confidence in our economy," he said.
India's economic growth rate slipped to nine-year low of 6.5 percent in 2011-12 and as per the estimate of the Reserve Bank, the growth rate is likely to remain at the same level.
Promising to put the country back on the path of high and inclusive growth, Singh said, "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."
Referring to the issue of rising fuel subsidy and high fiscal deficit, he said, "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."
The Prime Minister further said that unchecked fiscal deficit would lead to a further steep rise in prices and a loss of confidence in the economy.
"The prices of essential commodities would rise faster. 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. Unemployment would increase," he said.
Recalling that the country came out of the economic mess in 1991 by taking strong decisions, Singh said, "I would be failing in my duty as Prime Minister of this great country if I did not take strong preventive action.
"You can see the positive results of those steps. We are not in that situation (1991) Friday, but we must act before people lose confidence in our economy," he added.
Stressing that the UPA Government is the government of the 'aam aadmi', the Prime Minister said economy has grown at a 8.2 percent in the past 8 years.
The government ensured that poverty declined at much faster rate, and rural consumption per person increased at faster pace.