6.5% growth target looks difficult: PM
Promises to make every effort to ensure the economy rebounds Venkat Parsa New Delhi: Prime Minister Manmohan Singh conceded on Friday that the...
Promises to make every effort to ensure the economy rebounds Venkat Parsa New Delhi: Prime Minister Manmohan Singh conceded on Friday that the growth rate was set to drop below 6.5 per cent target set out in the Union Budget. However, the Prime Minister told the captains of industry that he will make every effort to ensure the economy rebounds. Addressing the 92nd Annual General Meeting of Assocham here, Manmohan Singh said, "I would not like to make a forecast of what our growth will be in the year 2013-14. The IMF has recently reduced its earlier projection of growth rates for all countries, including India, for 2013. We had targeted 6.5 per cent growth at the time the Budget was presented. But it looks as if it will be lower than that." The Prime Minister said, "Let me begin by stating upfront that we, like most other countries, are going through a difficult period. I know that business is deeply concerned about the slowdown in our economy. It is looking to the government to bring the economy back to a higher growth path. This, I believe, is a legitimate expectation and is also upper most in our mind. When things are going well, government should interfere as little as possible. When things are going bad, as they seem to be at present, it is the responsibility of the Government to become more proactive." Several reforms, he said, have been undertaken over the last one year. The Banking Laws have been amended to raise the cap on voting. Subsidy reform and rationalisation has started in full force. Direct Benefit Transfer Scheme is being rolled out across the country to reduce both wastage and corruption in delivery of public service. Foreign Direct Investment (FDI) has been liberalised in single-brand retail, multi-brand retail, civil aviation and power exchanges. More FDI reforms are on the anvil, as has been reported. A new bank licensing policy has been announced and new licences are soon to be awarded. Emphasising that infrastructure is absolutely critical for medium-term growth prospects, Prime Minister Manmohan Singh said Government is monitoring progress in this area on a quarterly basis. Several initiatives are being pursued. The Government has plans for setting up two major ports in Andhra Pradesh and in West Bengal. New airports are envisaged to come up in Navi Mumbai, Juhu, Goa, Pune and Kannur. At 50 other locations, new small airports are being built. Major railway projects, including an elevated rail corridor for Mumbai, are being processed. Feasibility of a bullet train from Mumbai to Ahmedabad is being studied. Industrial Corridors from Delhi to Mumbai, Amritsar to Kolkata and Chennai to Bangalore are being considered. All these initiatives are being monitored at the highest-level with a sense of urgency. The Prime Minister assured that the Government is committed to bringing Current Account Deficit under control. Ideally the Current Account Deficit should come down to 2.5 per cent of GDP. It is clearly not possible to do this in one year, but Current Account Deficit in 2013-14 will be much lower than 4.7 per cent level, recorded last year, he said. It will decline further next year. All policy instruments available � fiscal, monetary and supply side interventions � will be used to ensure that Current Account Deficit (CAD) declines further over time. The fiscal deficit, which is the accumulated effect of fiscal stimulus given in the past, expanded and it needs to be reduced, he said. On the gold front, he said, "We have taken measures to control the demand for gold and I am happy to say they have had some effect. Gold imports declined sharply in June, and I hope they will stay at normal levels from now on." On petroleum products, he said the Government began a process of correcting the prices of petroleum products last year. The gradual correction that was taking place in diesel prices had reduced the gap in under-recoveries from almost Rs 13 per litre to less than Rs 2 per litre. Some of this has been undone by the depreciation of the rupee. However, the policy of adjusting prices to progressively eliminate under-recoveries remains in place, he said. RBI actions not to result in higher rate New Delhi (PTI): The Reserve Bank's tough measures to arrest rupee's fall will not translate into higher interest rate and the steps will be reversed with easing of speculative pressure on domestic currency, Prime Minister Manmohan Singh said on Friday. "More recently, it (RBI) took additional steps to raise short-term interest rates. These steps are not meant to signal an increase in the long-term interest rates. They are designed to contain speculative pressure on the currency. "Once these short term pressures have been contained, as I expect they will be, the RBI can even consider reversing these pressures," Singh said while addressing the annual meeting of industry chamber Assocham. Singh said the RBI has done its bit to stabilise market expectations. Hits back at critics New Delhi (PTI): Prime Minister Manmohan Singh hits back at political critics on his government's performance saying it makes for good television but presents a very distorted picture. "Let me address the issue of UPA government's performance. Our political critics focus on the experience of one bad year. This makes for good television but it is a very distorted picture," he said addressing the Assocham annual meeting. He told his critics that the annual average growth in the eight years of UPA from 2004-05 to 2012-13 was 8.2 per cent, much better than the 5.7 per cent reached in the previous eight years under the NDA. Singh said agriculture did much better in the 11th Plan than in the 10th Plan and rural real wages have increased in much faster in the 11th Plan than during the 10 years preceding it. The percentage of population below poverty line declined to 0.7 per cent per year before UPA came to power, he said, adding, "it has fallen more than 2 percentage points per year between 2004-05 and 2011-12." "I think this is a record that any government can be proud of. I agree we have had one bad year. I assure you we will get out of it," the Prime Minister said. Manmohan vows more FDI reforms New Delhi (PTI): Hinting at RBI reversing its recent tough monetary measures to arrest rupee fall, Prime Minister Manmohan Singh has promised to unleash more FDI reforms and push several infrastructure initiatives to boost growth. "The most immediate cause of worry is the recent volatility in foreign exchange market...The RBI has done its bit to mobilise market expectations. More recently, it took additional steps to raise short-term interest rates. "These steps are not meant to signal an increase in the long term interest rates. They are designed to contain speculative pressure on currency. Once these short term pressures have been contained, as I expect they will be, the Reserve Bank can even consider reversing these pressures." On the other problem of current account deficit (CAD), he said, the government would use all policy instruments available -- fiscal, monetary and supply side interventions -- to ensure that CAD declines further over time. Asserting that the basic fundamentals of economy were sound and healthy, the Prime Minister said the government has been taking all measures to correct imbalances on the macro front. Making it clear that the government needs to take steps to revive the momentum of investment, he said many projects that have been held up for lack of regulatory approvals were being expedited and big-ticket projects will be identified to clear the hurdles. Singh said infrastructure was absolutely critical for medium term growth prospects and progress on them was being monitored on a quarterly basis. He listed a number of initiatives being pursued that include setting up two major ports in Andhra Pradesh and West Bengal, new airports in Navi Mumbai, Juhu, Goa, Pune and Kannur. The Prime Minister said while FDI has been liberalised in single brand retail, multi-brand retail, civil aviation and power exchanges, "more FDI reforms are on the anvil". A new banking licensing policy has been announced and new licenses are soon to be awarded, he added. He also remarked that Gas pricing has been corrected to reflect market realities better, adding, procedural improvements have been made in the road sector to improve the economic viability of projects. "We will persevere with these initiatives and I hope that their impact will be felt in the second half of this year," he said.