Attributes inflation largely to global oil and food prices
Sobriety in corporate lifestyle can help cut costs
Macro economic parameters are robust
NEW DELHI: Declaring inflation as the immediate challenge, Prime Minister Manmohan Singh on Tuesday pitched for political consensus even as he asked industry to help maintain the price line by absorbing the rise in input costs, passing on the benefits of tax and duty cuts to consumers and not falling prey to the temptation for short-term gains.
Addressing the annual meeting of the Confederation of Indian Industry (CII), Dr. Singh said that while the Government had the primary responsibility for sound macro economic management, leaders of industry, particularly in sectors characterised by significant market powers in the hands of a few producers, had a societal obligation to assist the Government in moderating inflationary expectations.
Referring to the steps taken by the Government to check prices and the prospects of a normal monsoon helping in easing the situation, the Prime Minister said industry and trade must cooperate with the Government to ensure long-term stability of the growth process.
“If we can ensure price stability that will help sustain growth process,” he said while counselling trade and industry to absorb, to the extent possible, the rise in input costs by laying emphasis on improved productivity and passing on the benefits of tax and duty cuts to consumers to help maintain the price line.
He also advised corporate honchos to show sobriety in their lifestyle. “A measure of sobriety in corporate lifestyle and compensation can also help cut costs and maintaining the price level.”
“For the Government to be more productive, more creative and more effective, we would need greater political consensus and some nationally accepted norms of governance in our Parliamentary system.”
Last week, he had asked political parties not to indulge in ‘scare-mongering’ on prices — a statement that offended the Left parties, the main prop for the UPA Government.
The Prime Minister attributed inflation largely to global oil and food prices. He said the global response to the problem had not been adequate and wanted India too to be a part of management of crisis-riddled world food economy and the financial system.
In the context of rising global commodity prices, Dr. Singh lamented that the world community had not done enough to address the challenge of rising food and oil prices and underlined the need for a new global connect between developed and developing countries to stabilise food prices.
“The rise in global food prices not only slows down the growth momentum, it also accentuates global inequalities. The world awaits a new concordant between developed and developing nations on food security,” he said.
He, however, added that challenge of food security could not be addressed without solving the problem of rising oil prices.
“I am deeply dismayed that the global response to this third energy crisis has fallen short of our expectations and compares poorly with the response to the first and second oil crisis,” Dr. Singh said
He told captains of industry that domestically prudent fiscal management would be a key concern for the Government as “money does not grow on tree,” signalling limitation of resources.
Emphasising that the broad macro economic parameters were robust, the Prime Minister said India was on a new growth path making the country the world’s second fastest growing economy.
“It is not my intention to understate the problems in hand. At the same time it is also not correct to belittle what has been achieved and what has been done,” Dr. Singh said adding that the Government was worried about industry’s various concerns and was focusing on addressing them.