Inflation may have caused Cong defeat in state polls: PM

Says economy is turning up; low job creation in manufacturing a concern

Admitting that the Congress faced a drubbing due to the people’s anger over high prices, Prime Minister Manmohan Singh on Friday said his government could not rein in inflation effectively as global factors were also behind high prices. Singh said the economy, which delivered a sub-four per cent growth in four straight quarters,  is looking up, but manufacturing sector is not generating enough jobs. He promised to continue with economic reforms to spur growth.

“... I, will be honest enough to say price rise was a factor in the people turning against the Congress. But reasons were beyond our control. International energy and commodity prices were rising and hence (it was) difficult to control prices as effectively as we could have done,” Singh said at a press conference, his third in nine years as prime minister.

Earlier, Congress President Sonia Gandhi had also said price rise was a factor in the party’s poor performance in the recent Assembly elections. (REPORT CARD OF UPA-I AND UPA-II)

He said supplies needed to be augmented to control food inflation. He made it clear that the government’s social welfare programmes had blunted the impact of rising prices. Besides, farmers were also getting higher prices, he added.

“We should remember that those who produce food, gain by higher prices. We need to increase supplies and improve marketing arrangements and logistics... Rural wages have increased in real terms much faster than earlier,” he said.

India’s Wholesale Price Index-based inflation rose to a 14-month high of 7.52 per cent in November against seven per cent in the previous month. Food inflation has been hovering between 18 and close to 20 per cent since August till November.

The prime minister said the food security law would shield the common man from higher food prices. The law is expected to be one of the main planks of the Congress in the general elections, which is a few months away. However, the Congress had made it a major plank in the Assembly elections.  He said no final decision on raising the number of subsidised LPG cylinders had been taken.

Pointing to the economic growth in the nine years of UPA (United Progressive Alliance) rule — combining both the first and ongoing second stints — Singh said the economy was now looking up. “We are set for better times. The cycle of economic growth is turning. Many steps have been taken to address the domestic players.”

India’s economic growth crashed to a decadal low of five per cent in 2012-13. Policymakers hoped for a revival, but it did not occur in the first half of the current financial year, when economic growth stood at 4.6 per cent. Now, the government hopes for a revival in the second half of 2013-14.  

The prime minister expressed concern that employment generation did not grow in the manufacturing sector at the pace he wanted.

“I am concerned that we have not been as successful in generating employment in the manufacturing sector. We are working hard in this direction.”

According to the 12th Five Year Plan (2012-13 to 2016-17) document, employment in manufacturing reduced by five million during 2005-06 to 2009-10, after adding almost 12 million jobs in the first five years of this century.

Singh said there were still five months left in his term and he would take steps to increase growth and undertake more reforms in this period.

“Reform is not an event, but a process. We will continue to push the cause of reforms wherever there is scope and the situation permits... The five months that are there with us are still a long period  to revive the growth impulses of our economy... If I am able to do it, I will consider it to be a job well done.”

He said, along with international slowdown in the economy, there have been domestic factors hurting the industry too. “There have been infrastructure bottlenecks. Also, delay in environment clearances to projects has adversely impacted industry.”

He said no final decision is taken on implementation the Kasturirangan report on enevironment impact on Westerm Ghats:

To a query on encouraging foreign investors,  Singh said India provides hospitable environment for FDI. “We will continue on that path.”

The prime minister said the UPA government would continue to improve the climate for foreign direct investment.

QUESTIONS THAT PRIME MINISTER MANMOHAN SINGH EVADED

In Himachal Pradesh, there are corruption allegations against Congress Chief Minister Virbhadra Singh... 

I’m not able to comment on what you have referred to happening in Himachal Pradesh. I have not had the time to apply my mind to what is the truth in those allegations. I have seen newspaper reports and received a letter from Arun Jaitley.

Several Congress chief ministers, after the poll debacle, attacked the UPA’s inability to control inflation. Therefore, will policies like the subsidy on LPG (liquified petroleum gas) cylinders be revised after the recent poll debacle?

I would not like to speculate on what is going to happen in coming months. I will be honest enough to say it could be that price rise was a factor in people turning against the Congress. The reasons for price rise were beyond our control — the rise in global commodity prices.

The Kasturirangan Committee report on industrialisation and mining in the Western Ghats is a contentious issue in several Congress-ruled states...

The Kasturirangan report is still being discussed with various state governments, no final decision has been taken.

During the tenure of the UPA-I, the PM had rated his government seven out of 10. After nine and half years in power, how would he rate his government?

It is for you people to rate. I feel I have done reasonably well.