PM says fiscal deficit too high, deters investment

Last Updated: Fri, Nov 02, 2012 04:42 hrs

With barely 18 months to go for the general elections, Prime Minister Manmohan Singh today asked ministers to be watchful about the drags on economic and infrastructural growth. He identified such drags as "fuel supply arrangements, security and environmental clearances and financing difficulties".

This was the PM's oblique response to Environment Minister Jayanthi Natarajan's recent rebellion on the proposed creation of a National Investment Board (NIB) and her fears that environmental concerns would fall by the wayside.

The world was going through hard times, the PM said, and India could not be untouched by global developments. Growth had decelerated, exports had fallen and the fiscal deficit was growing, he said.

"Of particular concern is the fiscal deficit, which is too high and acts as a deterrent for domestic and foreign investment. These issues have a rippling effect across the economy and on the work of many departments represented here," he said.

"I am aware we are working against the political calendar but we should not lose sight of the fact that we are also involved in the task of nation-building. Our responsibilities and our commitment, therefore, need to transcend other considerations," said Singh, presumably referring to political differences not just with the Trinamool Congress on several policy issues but also internal dissension in the Congress on those.

Singh stressed, both in his speech and separately later, that younger ministers be given more work and made to feel part of the policy process.

Finance Minister P Chidambaram, Parliamentary Affairs Minister Kamal Nath and Agriculture Minister Sharad Pawar also spoke. Chidambaram said "quick decisions" needed to be taken, adding major decisions could not be kept in abeyance.

His response on the PM's fiscal deficit observation was the government needed money and disinvestment would be one route it would tap. That should not be construed as selling the family silver, he said.

"If major ministries like coal, power, roads and steel grow only at two to three per cent, how can the economy grow at seven to eight per cent?" Chidambaram asked.

He emphasised on the need for faster land acquisition, "without bypassing extant rules".

Explaining the foreign direct investment (FDI) in retail decision, with naysayers such as Defence Minister A K Antony present, Chidambaram said, "FDI is not an option, it is an imperative for the economy."

He illustrated his point with an example of coconut farmers in Kerala. "A coconut in Kerala or Tamil Nadu costs about three to four rupees at the farm gate but by the time it reaches the market, it costs Rs 20," he said.

The same, he said, was the case with potatoes in West Bengal. FDI would improve supply chains and curb inflation, benefiting farmers in both West Bengal and Kerala, he said.

Kamal Nath urged ministers, especially the new ones, to attend Parliament, stay during the proceedings and facilitate MPs to work better.

Pawar spoke last and said ministers of state and junior ministers needed to be present at meetings of their respective ministries so that they became "adept with the functioning of the ministry".

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