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Inflation will be curbed, but not at the cost of growth: PM

Inflation will be curbed, but not at the cost of growth: PM
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First Published: Fri, Feb 25 2011. 07 56 AM IST
Updated: Fri, Feb 25 2011. 07 56 AM IST
New Delhi: Signalling the Congress-led United Progressive Alliance (UPA) government’s intent to initiate measures in the Union budget to rein in inflation, Prime Minister Manmohan Singh on Thursday went out of his way to clarify it would not be at the expense of economic growth.
This growth, he argued, is imperative for the government to sustain its focus on social spending. As a measure to alleviate poverty, the UPA government would introduce the National Food Security Bill at an “early date” and revamp the public distribution system (PDS).
The Prime Minister’s remarks are significant as it comes just ahead of the Union budget to be presented on 28 February and just three days after President Pratibha Patil flagged inflation control as a key priority.
“We have to strengthen the PDS. PDS is the kingpin of our strategy to stabilize prices of foodgrains. When we come forward with the National Food Security Bill, I am confident that we will expand the frontiers of our ability to control inflation,” Singh said while replying to a debate on the motion of thanks to President Patil’s address to Parliament.
Singh’s assurance came a day after workers from different parts of the country flooded the Capital’s streets in a protest against high food inflation and corruption scandals that have haunted the Congress-led government for the last few months. India’s food inflation touched 11.49% in the week ended 12 February.
Pointing out that “a ham-handed approach” to the crisis would have killed the growth process, the Prime Minister said: “The government is very serious and it takes very seriously its commitment to do everything in our power to strengthen the growth impulses in agriculture and to strengthen the growth of productivity.”
Experts say managing the economy at this phase is tough. “Pruning the (fiscal deficit) is tricky, especially when the economy is showing signs of a slowdown, cash-guzzling social sector projects are due to be announced and high commodity prices globally are likely to bloat the subsidy bill,” HDFC Bank Ltd chief economist Abheek Barua wrote in a note.
Singh has indicated earlier that there would be reform-oriented measures in the Union budget.
The Prime Minister, who has been under severe attack from the opposition for his failure to act against the corruption in his government in time, defended his tenure in office. The UPA has been fighting to salvage its image after being mired in a series of corruption charges, including irregularities in second-generation (2G) spectrum allocation and in preparations for the October Commonwealth Games.
Experts fear that the scandals and controversies have affected the prospects of foreign investment. The UPA faces elections in the coming months in the key states of West Bengal, Assam, Tamil Nadu and Kerala.
“Action has been taken against the wrongdoers as and when there has been credible evidence. The government will do everything to clean public life of corruption,” he said. “We will not flinch from ensuring that no wrongdoer escapes the penalties that our legal system provides,” the PM said.
He, however, maintained that there was nothing wrong with the telecom policy. “The way it was implemented, I think gave rise to problems.”
The Prime Minister, in a veiled attack on the Bharatiya Janata Party-led opposition, said his government had merely followed the previous National Democratic Alliance government’s policies in telecom and also in the decision to open satellite services to non-government parties, Indian and foreign firms—a move that led to the controversial Antrix-Devas deal, which has been annulled.
Singh also took a swipe at the opposition for the controversy over the alleged black money stashed away in foreign banks, saying that “black money accumulation is not a product of the last four or five years.”
On foreign policy, Singh said there were “hopeful signs” and an atmosphere in which negotiations between India and Pakistan can go forward. “I sincerely hope and believe that the new ruling classes of Pakistan would grasp the hands of our friendship and recognize that whatever are our differences, terror as an instrument of state policy is something that no civilized society ought to use,” he said. The foreign secretaries of both countries met earlier this month in Thimphu and agreed to resume the peace dialogue. The first meeting under this process is expected to be in the last week of March when the home secretaries meet.
Separately, on Thursday, the government also announced a 30-member joint parliamentary committee (JPC) to look into the 2G allotment.
Finance minister Pranab Mukherjee moved the motion for the appointment of the committee to look into the telecom policy pursued from 1998 to 2009, including the allocation and pricing of telecom licences and spectrum and to examine “irregularities and aberrations, if any.”
The committee, which has 20 members from the Lok Sabha and 10 from the Rajya Sabha, will submit its report by the end of the monsoon session of Parliament.
The opposition and the ruling party traded charges in the Lok Sabha during a debate on the motion to constitute the JPC.
Reuters contributed to this story
lliz.m@livemint.com
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First Published: Fri, Feb 25 2011. 07 56 AM IST