Prime Minister Manmohan Singh, on Tuesday, said his government was determined to take ‘tough’ decisions, including on controlling subsidies, to reverse the expansion of the fiscal deficit, even as he expressed confidence in bringing back the rhythm of high growth of 8-9 per cent annually.
Concerned over the dip in India’s economic growth, Dr. Singh said the public in the country was ‘impatient’ for a return to high growth and faster jobs creation.
He also said that steps were being taken to revive investor sentiment in the country.
The Prime Minister addressed some critical issues relating to the slowdown in India’s economy in his address during the Plenary Session of the seventh summit of the Group of 20 developed and developing countries.
“Like other countries, we too allowed the fiscal deficit to expand after 2008 to impart a stimulus. We are now focussing on reversing the expansion. This will require tough decisions, including on controlling subsidies, which we are determined to take,” Dr. Singh told the galaxy of world leaders, including U.S. President Barack Obama.
India is targeting a fiscal deficit of 5.1 per cent of GDP for this fiscal. But a higher subsidy bill and lower tax revenue have resulted in its fiscal projections for 2011-12 go awry. The fiscal deficit was 5.8 per cent in 2011-12, wider than the initial target of 4.6 per cent. The country’s growth slowed to a nine-year low of 5.3 per cent in the fourth quarter of 2011-12.
Referring to the slowdown in India like other emerging economies, the Prime Minister acknowledged that internal constraints had also affected performance and that the government was working to correct them. “The global downturn and especially the impact on capital flows have played their part. Internal constraints have also affected performance, and we are working to correct them,” he added.
