Pegs growth at 10%; Goes easy on reservations; calls Naxals threat to economy.
Prime Minister Manmohan Singh today told the nation that inflation should come down to 5-6 per cent by December. He also offered a temporary reprieve for the private sector, by delaying reservation of jobs for the underprivileged across all sectors until there was a suitable environment for such affirmative action.
Addressing his first national press conference after the United Progressive Alliance (UPA) returned to power in 2009, Singh lobbed an unexpected ball in the court of his finance minister by setting a target for inflation reduction. “It is true that inflation is still a problem area but it is a phenomenon of the past one-and-a-half or two years, because of the international economic crisis, particularly of petroleum products, drought and floods in the country. But, I believe we can bring down the rate of inflation to 5 or 6 per cent by December,” he said.
The latest inflation rate, computed on the basis of the rise in the wholesale price index, is ruling at 9.6 per cent, while the food inflation rate is even higher, at 16.5 per cent. On the question of fulfilling the UPA government’s commitment on extending reservation of jobs to the private sector, the prime minister said there was need to create an environment so that industry could help and take this forward. “We have to work hard on this,” he said.
Singh also raised the annual growth target in the medium term to 10 per cent and linked the achievement of higher growth to developing healthy and normal relations with neighbouring countries, including Pakistan. “India can’t realise its full development potential unless it has good relations with its neighbours,” he said.
When asked about corruption, specifically on the role of telecom minister A Raja, the prime minister offered a considered reply. On the disparity between the 2G and 3G prices, he reiterated what Raja had told him, adding the matter was now with the Central Bureau of Investigation (CBI) and if there was proof of corruption, no one would be spared. “It is true there is a huge gap between the 2G and 3G prices. But, I have to look at the problem in a whole perspective. Currently, a CBI enquiry is going on. But if there are cases of corruption, the guilty will be punished.”
The prime minister also said his telecom minister had told him he was following what the telecom regulator had prescribed and that the policy on this matter was laid down in 2003 before the UPA came into being. Raja had argued that not granting the new entrants the same spectrum facility would not be fair to them, Singh explained.
Singh admitted the current manner of financing political parties and elections was a source of black money in the economy, but political reforms to change the system required a broad consensus among political parties. All like-minded political parties should join the process of uprooting corruption, he said.
On Pakistan, the PM made a strong argument for normalising relations with India’s biggest neighbour. He said he was trying to reduce the gap between the two countries but admitted a ‘trust deficit’ was the biggest problem. “We are willing to discuss with Pakistan, all outstanding issues. The only condition is, Pak territory should not be used for terror against India,” he said. However, that he would do nothing to worsen relations was clear from his response to a question on whether India would consider taking back Pakistan Occupied Kashmir and Aksai Chin. “The matter has not come up,” he said. “We are going to make a new beginning.”
Financial and economic inclusion appeared to be the PM’s central idea. He said not enough had been done for the uplift of Muslims, SC-STs and other backward classes. His government had made financial commitments that no other government had done for affirmative action, he said.
There were many questions on the Naxal threat. He said he had himself warned that Naxalism had emerged as the single biggest economic and political challenge. “It is hard to put a figure to how much the economic reform programme had been set back, because of the Naxal threat. But this much is clear: if Naxalism is not controlled it will drag the economy down further.”
Nor did he agree with the suggestion that by not taking an early decision on Afzal Guru’s hanging, his government was being branded a soft state. “The law of the land should take its course,” he said, adding that his government was committed to zero tolerance for any human rights violation.
