New Delhi: After brainstorming with top world leaders in Beijing on the raging financial turmoil, Prime Minister Manmohan Singh has cautioned that India’s economy was also bound to feel the pain ‘sooner or later’ as “we are not in complete control.
“We are not in complete control. There are bigger players and we are victims of that. The crisis is not of our making,” Singh said after participating at the 7th Asia-Europe Meeting (ASEM) Summit in Beijing, attended by 45 leaders.
“Well, it all depends on how long it takes the world community to restore confidence to the global financial markets,” the economist-turned-politician, whose speeches were listened with rapt attention in Beijing, said.
“Sooner or later, the economy is bound to experience the pain,” Singh warned during an interaction with reporters on board his special aircraft while returning home from his two-nation tour of Japan and China.
Tracing the origin of the current global financial crisis, Singh said that it emerged in the US and Europe.
Singh said that despite strong corrective measures like injecting more liquidity and capitalising the banking system, he was still ‘worried’.
“The type of integrated world economy we live in we are not immune and I had mentioned in Parliament earlier this week and I repeated that same sentiment in Beijing,” Singh said.
However, the Prime Minister said that his government has had a reasonably good term in office till now.
“We have had a reasonably good term and I would not deny that over the last few months inflation had become a problem. Also, recently because of the global factors, the financial crisis is having some effect on our economy. Therefore, we are obliged to take corrective measures,” Singh said.
“To say that I am not worried would not be correct. It is my duty as Prime Minister to worry when things don’t go as planned,” he said.
The Prime Minister was asked whether he was concerned about the economic crisis, months ahead of the general elections.
Asked to comment on the view of the Left parties that India has largely escaped the effects of the global financial turmoil due to their policies, the Prime Minister said: “I am afraid I don’t agree.”
“Strengthening India’s banking system, strengthening India’s insurance system has enabled us to deal with the crisis more effectively,” he said adding: “I beg to differ. But I am not very happy to part company with our Left colleagues.”
“In my view India is faced with difficult problems, all parties which are committed to secularism and nationalism must work together to deal with communal and regional divide which is being sought to be created by some anti-social elements,” Singh said.
“There are issues which require all political parties which think alike to sit together and I very much hope we can find ways and means to work with our Left colleagues,” Singh said.
He said that reforms cannot take place in political and economic vacuum and his government was faced with problems.
“The situation has been such that oil prices shot up in a manner that if I had passed on the whole burden to the people at large, there would have been reckless inflation,” Singh said, adding: “That would have been far more counter-productive than our position to pass on only a limited amount of increase to the final consumer.”
Looking at the economy from the traditional point of view, he said: “Below the line fiscal deficit has increased, but in a situation in which we are placed now, it is a definite advantage. It is not a disadvantage.”
“I think, we are in a typical Keynesian situation where there is a lack of demand, private sector demand is very weak, but strong government demand, both for social services and for investments will provide the essential stabilisers that our country needs in a time like this,” he said.
“We would have liked to do a lot more. But I think politics is the art of possibilities,” he said.