Manmohan hints at cut in oil subsidies

Puts focus on keeping inflation in check, generating more employment.

Prime Minister Manmohan Singh today said the government would do everything possible to keep inflation in check but cautioned that there were limits to what it could do to insulate people from the effects of rising oil prices.

"There is a limit to which we can go on subsidising the consumption of petroleum products in the face of rising import costs. How much longer can the government treasury bear this burden?" he asked, explaining that oil subsidies at current levels were not sustainable.

In his televised Independence Day address to the nation, Singh said oil subsidies could at some point affect the country's ability to spend on other important development programmes.

"I must remind you that two years ago international oil prices were hovering just over $30 per barrel. Today, it is close to $75. Even though world oil prices have more than doubled, we have succeeded in insulating our consumers to a great extent," he said.

The prime minister referred to 8 per cent growth for three successive years, the impressive performance of industry and the services sector, new power plants, railways and airports and the creation of special economic zones, adding that economic growth was the only way to end poverty.

"Our economy has been growing at an impressive pace of over 8 per cent. Such rapid growth over three successive years is unprecedented in Indian history. I see a reassuring confidence in our industry in being able to take on the challenge of the rest of the world. The growth of the manufacturing industry has touched 11 per cent in the last quarter, generating more jobs," he said.

"I sincerely believe that the most effective way to banish poverty is to generate growth, which in turn will create new opportunities for gainful employment," Singh added.

He said efforts should be made to generate more employment in the manufacturing and services sectors, to reduce the dependence on agriculture for creating jobs.

"We must ensure that more people get employment in manufacturing and services so that the disproportionate burden on agriculture in providing a livelihood to two-thirds of our population gets reduced," he added.