Makes a strong case for disinvestment to raise resources.
Prime Minister Manmohan Singh expressed confidence that the economy would grow at 8 to 9 per cent over the next two or three years, “even if the world economy does not do well”. He expected the economy to grow at least 7 per cent in the current fiscal.
“I am convinced, since our savings rate is as high as 35 per cent, given the collective will, if all of us work together, we can achieve a growth rate of 8 to 9 per cent, even if the world economy does not do well,” Singh said in his reply to the debate on the President’s speech.
The prime minister spoke in both the Lok Sabha and Rajya Sabha, his first major speeches after assuming office.
Weeks before his government’s next General Budget, Singh, who was replying to the debate on the President’s speech, also proposed increasing public expenditure to boost the economy, especially in infrastructure.
Critically, given yesterday’s opposition from allies such as the Dravida Munnettra Kazhagam (DMK) and the Trinamool Congress to selling profitable state-owned enterprises, the prime minister made a strong case for disinvestment as a means of raising resources for social programmes.
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“Education, health and environment protection are the means through which we can help our people improve the quality of their living. But all this requires resources and money doesn’t grow on trees. If we have to invest in our flagship programmes, we need a lot more resources and an expanding pool of resources,” he said.
Terming the increase in public investments as “the right way to deal with the international slowdown”, Singh said, “We can’t spend our way to prosperity. In the present situation, there is considerable scope to increase public expenditure, particularly on infrastructure projects. And that would not lead to inflation. That would only add to our development growth potential.”
The first United Progressive Alliance government had already rolled out three stimulus packages — the last one in the Interim Budget in February — to tackle the ripple effects of the global slowdown.
“The whole world is now talking about purposeful public investments for growth. We should put in place a medium-term fiscal strategy to ensure the fiscal situation doesn’t go out of our hands in the medium term,” the prime minister said in the Rajya Sabha.
He, however, emphasised, despite a mounting fiscal deficit, the government has the “manoeuvrability to spend more resources” on the flagship programmes like Bharat Nirman or National Rural Employment Guarantee Schemes.
“I recognise that the fiscal system is under strain. The fiscal deficit has increased, but I do believe that in the short run, we have the manoeuvrability to spend more resources on our flagship programmes. I sincerely believe that the finance minister will unfold the government’s strategy in this regard when he presents his Budget.”
Sensex rises 461 points after PM’s remarks
The Bombay Stock Exchange benchmark Sensex on Tuesday posted its second-biggest gain of over 460 points since the United Progressive Alliance coalition came to power, after Prime Minister Manmohan Singh’s optimistic economic growth estimates enlivened the markets.