Justifying the diesel price hike as an important step in the right direction, he said, rational energy pricing was critical and "our energy prices are out of line with world prices".
In his opening remarks at the full Planning Commission meeting for approving the 12th Plan document, the Prime Minister spoke of three economic scenarios of "strong inclusive growth", "insufficient action" and "policy logjam" and said the country needed close to one trillion dollar investment in infrastructure sector during the period.
Outlining three scenarios, he said Scenario I called "strong inclusive growth" presents what is possible if the policy actions mentioned in the Plan are substantially implemented.
"I believe that we can make Scenario I possible. It will take courage and some risks but it should be our endeavour to ensure that it materialises. The country deserves no less," he said.
In big ticket reforms, the Cabinet Committee on Political Affairs on Thursday decided to hike diesel prices and put a cap on supply of subsidised LPG cylinders while yesterday the Cabinet and CCEA cleared FDI in multi-brand retailing and aviation and disinvestment in four PSUs.
Referring to high fiscal deficit and the need to bring it down, the Prime Minister said the 12th Plan projects a current account deficit of 2.9 per cent of GDP.
"This must be financed mainly through Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) flows so that reliance on external debt is limited. I believe we can attract the financing we need provided out fiscal deficit is seen to be coming under control and the growth momentum is regained",he said.
Singh said, energy is a difficult area where policy needs a comprehensive review. "Rational energy pricing is therefore critical. Our energy prices are out of line with the world prices. The recent increase in diesel price is an important step in the right direction." MORE