PM stays firm, calls for ‘some risks, courage’

Throwing his weight behind the slew of reform measures announced by the government over the last two days, Prime Minister Manmohan Singh said today that it would take "courage and some risks" to break the policy logjam.

Justifying the diesel price hike as an "important step in the right direction", he said that rational energy pricing was critical as "our energy prices are out of line with world prices".

In his opening remarks at the full Planning Commission meeting for approving the Twelfth Plan document, Singh said his immediate priority was to "orchestrate a rebound in the economy" during the second half of the current year, and then try to accelerate growth to around 9 per cent by the end of the Plan period. "This will yield a target growth rate of around 8.2 per cent over the Twelfth Plan," he said.

Outlining the three distinct economic scenarios mentioned in the Plan — "strong inclusive growth", "insufficient action" and "policy logjam", as reported by The Indian Express on September 12 — Singh said "the most important area for immediate action is to speed up the pace of implementation of infrastructure projects", where the country needs an investment of nearly one trillion dollars during the five-year period.

"I believe that we can make Scenario I (strong inclusive growth) possible. It will take courage and some risks but it should be our endeavour to ensure that it materialises. The country deserves no less," he said.

In major reforms, the Cabinet Committee on Political Affairs on Thursday decided to hike diesel prices and put a cap on supply of subsidised LPG cylinders while on Friday, the Cabinet and the CCEA cleared FDI in multi-brand retail and aviation sectors and disinvestment in four PSUs.

Referring to the high fiscal deficit levels and the need to bring it down, Singh said the Twelfth Plan projects a current account deficit of 2.9 per cent of GDP. "This must be financed mainly through foreign direct investment (FDI) and foreign institutional investment (FII) flows so that reliance on external debt is limited. I believe we can attract the financing we need provided our fiscal deficit is seen to be coming under control and the growth momentum is regained," he said.

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