Inflation control social priority; growth will happen: PM

Prime Minister Manmohan Singh has said that keeping the lid on inflation rate was a priority for his government, but controlling the price-line did not mean growth would be sacrificed.

Amid fears that a hike in petrol and diesel prices might fuel inflation, he said the government has taken an important policy stand to keep the inflation rate under check and ensure that growth is more inclusive.

Calling inflation an iniquitous tax, he said: "It hurts the poor more than the rich. Therefore, it is essential that we ensure that the poor are not adversely affected by high inflation, particularly in basic items of consumption. This is a matter of social priority and of their survival."

Wholesale price index-based inflation rate grew 4.07 per cent for the week ended February 2, a tad slower than the 4.11 per cent in the previous week. But yesterday's Rs 2 and Re 1 a litre increase in petrol and diesel prices respectively could push up inflation rate in the coming weeks.

Addressing the annual meeting of industry chamber Ficci here, he said he also saw no reason why India could not sustain a high growth rate, while successfully containing inflation.

"I know that some of you are not happy about our emphasis on inflation-control. There have been some impatient editorials about the sacrifice of growth at the altar of inflation-control," he said.

"There are global concerns of a slowdown. We need to be aware of these concerns and we will take steps to limit their impact on us.

The Finance and Commerce Ministers are sized of the matter. I do not see any reason why we cannot sustain 9 per cent growth rate even in the face of a global slowdown."

The Indian economy registered a growth rate of 9.6 per cent last year and is likely to touch almost 9 per cent this year, Singh said.

"On the other hand, there are clouds on the horizon with a distinct possibility of global economy, particularly the developed world, facing a downturn in the coming years," he added.

He said that a major part of India's growth story is driven by domestic factors, particularly improved investment and consumption demand. However, India cannot be completely insulated from "chilly global winds that may blow in our direction".

Pointing out that savings rate has almost touched 35 per cent of the GDP and investment rate is at its peak of over 36 per cent, he said investment is an act of faith and vote of confidence.

"There will be ups and downs, there will be leads and lags, there will be sectoral and regional imbalances. These should be addressed. But let us not miss the wood for the trees.

"There is an underlying dynamism in our economy and it is translating into more employment, higher revenues for the government, higher level of social expenditure, higher incomes and, most importantly, into lower poverty and better standards of living," Singh said.

The Prime Minister said it will be his government's endeavour to maintain an environment conducive to enterprise and creativity, so that "we do not choke off essential growth processes which are essential to meet our social and national goals".