Though the United Progressive Alliance found it tough to manage political jolts from its constituents and allies in the past nine years, industry should not lose faith in the government’s efforts to revive the economy, Prime Minister Manmohan Singh said here on Wednesday, inaugurating the annual general conference of the Confederation of Indian Industry (CII).
Dr. Singh urged captains of industry to be positive and not get “swamped by a mood of negativism.” He told them to take in their stride the deficiencies that afflicted a democratic government.
The government had to face corruption and bureaucratic inertia and he had to contend with such woes even when the country was growing at the rate of 8 per cent. India Inc should have faith in the government’s determination.
Dr. Singh said a strategy had been devised to prove the prophets of gloom wrong and retrieve the economy from its temporary downturn. The limitations, however, were that one had to wait for the global economic situation to return to normal and also learn to live with the current account deficit (CAD) in the balance of payment with exports likely to remain weak.
The Prime Minister promised to deal with the constraints to restore macro economic balance, revive the investment environment and initiate reforms in the FDI, financial, power and fuel sectors and cut down on subsidies (including kerosene), some of which would be rolled out this month itself.
As a first measure towards cutting down fiscal deficit, the process of fiscal stimulation would be reserved, which, he said, was necessary to ensure availability of savings for investment, instead of being absorbed by government deficit.
But he was categorical about rationalising subsidies, particularly fuel — the next in line being kerosene in “due course of time.”
Other subsidies would also be targeted to prevent leakages, he said.
As regards the CAD, he conceded that it would be managed only over a few years from the current level of 5 per cent, and hoped for a marginal improvement in 2013-14.
Having financed $90 billion in the CAD without loss in foreign reserves, Dr. Singh was confident that capital inflows would remain strong in the next two years.
To boost foreign investment, the government would review the FDI policy comprehensively in the next few months.
Domestic investment would get a fillip with the government intending to allocate 31 blocks for oil exploration and production within two weeks, in addition to the five blocks already permitted. This would entail an investment of $20 billion.
The Prime Minister said a 13-year rift between the Ministries of Power and Coal had been bridged, paving the way for installation of the Rs. 14000-crore, 2000-MW North Karanpura power station in Jharkhand by NTPC.
Coal, gas supply
Dr. Singh hoped to resolve the problem of coal and gas supply to power plants within three weeks. The Ministries were working in a time-bound manner to find a solution.
With the Cabinet Committee on Investment (CCI) streamlining the process of environment clearance, Dr. Singh said, 12 coal projects had been fast-tracked and they would increase production by adding 37 million tonnes a year.
As for reforms in the financial sector, Dr. Singh said the government was carefully considering the recommendations of the Financial Sector Legislative Reforms Committee and promised to table in Parliament the revised Land Acquisition and Rehabilitation and Resettlement Bill, which the Cabinet had approved.
Hoping these initiatives would yield the desired results in the next few months and revise the investment sentiment, Dr. Singh gave a hint of more measures in the days to come.
