Kalam firm on nailing price rise

SIGNALS FROM RAISINA HILL

Inflation management, economic growth, fiscal responsibility and inclusive development were the highlights of President A P J Abdul Kalam's speech to the joint session of Parliament at the start of the Budget session today.

Pointing to a growing demand-supply mismatch as the result of strong economic growth and rising investment and incomes, the president said the government had made a "solemn commitment" to "take all necessary steps to ensure that the poor are not adversely affected by inflation," though he did not spell out what these steps would entail.

Meanwhile, headline inflation abated to 6.63 per cent during the week ended February 10, from a record level of 6.73 per cent the previous week, though it was still above the Reserve Bank's annual target of 5-5.5 per cent.

The president's address is considered a key document because it outlines the government's economic agenda. The Budget session is the longest of the three annual sessions of Parliament, the other two being the monsoon and winter sessions.

Talking of economic growth, Kalam said the last three years' growth rate of more than 8 per cent and this year's prospect of 9 per cent augured well for meeting the overall 11th Five Year Plan (2007-13) target of 9 per cent annual growth.

Echoing much of the 19-party coalition's Common Minimum Programme, he said economic growth was "not an end in itself" but a means to generate more employment, distribute incomes more equitably across social groups and regions, and "liberate the poorest of the poor from the scourge of poverty, ignorance and disease."

In a clear and strongly worded signal that the government would focus on cutting back expenditure to meet its obligations under the fiscal responsibility Act, Kalam said managing public finances with "responsibility and wisdom" was critical if the government was to sustain the growth process and address its commitment to inclusive development.

"Fiscal responsibility is not an academic obsession," he said.

Kalam also said the government would increase the rate of investment in agriculture, enhance production and productivity growth, increase farmers' incomes and unleash a Second Green Revolution.

In an indirect reference to the controversy facing the government's policy of acquiring land for its China-modelled Special Economic Zone policy, he said the government will bring in a new rehabilitation policy which will be backed by amendments in the Land Acquisition Act.

Pointing out that the food processing sector is improving the incomes of the farming community, he said a Food Safety Authority is being established shortly that will set standards and license the manufacture of healthy and safe food products.

The president also praised the expected 11 per cent growth in the manufacturing sector in 2006-07 and described the performance of key sectors like automobile, textile, pharmaceutical, steel, petrochemical, and cement as "impressive."

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PLAN OF ACTION

Government will continue to take steps to contain inflation

Economic growth seen close to 9 per cent this fiscal

Government will increase the rate of investment in agriculture

A new rehabilitation policy, backed by amendments in the Land Acquisition Act

A Food Safety Authority is being established shortly