Text of the Prime Minister, Dr. Manmohan Singh’s interview after the Union Budget 2012-13
There was a decline in our GDP growth. It is now 6.9% - that was a wake-up call. Hopefully we’re now awake. What do you see in the budget as a response to the wake-up call?
Right now, the challenge before the country is to accelerate the tempo of economic growth, at the same time to ensure that we do not slip on our obligations to moderate the price-rise. And I do believe, both these tasks the Finance Minister has tackled, and tackled well.
What do you think there is in the budget that promises to help, shall we say, with inflation?
Well. The biggest single thing that fiscal policy can do in controlling inflation is by controlling the fiscal deficit. Fiscal deficit in the current year has turned out to be as high as 5.9%. The Finance Minister has promised to bring it down to 5.1% of GDP. If that happens, that would be a material contribution to stabilizing the price level; also reducing the extent of crowding-out, that invariably follows if government borrowing goes haywire.
One reason why fiscal deficit went out of control, was that global prices of fuel and fertilizer increased. Apparently the subsidy bill will come down from 2.4% of GDP to 1.9%. How is this to be done?
The Finance Minister has pointed to the need to control subsidies. He has also said that he would bring the subsidies to less than 1.7% of the GDP in the next three years. Now, that is obviously a task which would, I think, require the government to put forward an effective programme for adjusting the prices of petroleum products, and adjusting other relevant prices. So we have to bite the bullet. There is no other way in which you can reduce subsidies.
Sir, that is a very courageous statement. Mamata Banerjee seemed to be very worried about any rise in the prices of these commodities. Has she been consulted ? Is she on board?
Well I think these are compulsions of managing a coalition. There will be difficulties. There have been difficulties. But ultimately, if the government is to govern, it must have a sustainable strategy for managing the economy. I sincerely hope, when the time comes to take relevant important decisions which are tough, we will consult all our allies and take them on board.
There is a proposal for extending Aadhar. There have been controversies also. Is it settled that Aadhar is to be the main platform on which the budget is to distribute benefits to the people of India?
Well. I think the Finance Minister has made that quite clear. That the report of the Aadhar Committee, bringing 40 crores additional numbers, that has been accepted. And therefore, I think, there may be controversies, and there are controversies in this sort of thing all over the world. But we have I think, begun well, and we will use the modern technological devices to cut out wastage and leakages in the delivery mechanism for various public-sector services.
On fertilizers, there has been nutrient based subsidy for phosphates and potassium. Will this be extended to urea?
Well. There is general agreement that we should have a nutrient-based subsidy for all the three. But it was deliberately felt that at a time when international prices of urea were increasing, it would, I think, be wise to go slowly in moving towards a nutrient based subsidy, and decontrolling urea as well. So, I think, it is a question of timing. But there are compulsions that require that the government will have to take sensible decisions, even though, I think, they may not be very popular.
In the past three years, what were the biggest achievements, and biggest disappointments of UPA-2.
The biggest achievement was that we were able to protect the growth rate of the economy much better than most other countries. That even though our growth rate this year will be low, compared with the past. Even then, it is something which is very favourable when we see what is happening in the rest of the world. We are still in the league of front-runners, in the growth movement, and, the fact that we were able to protect the growth rate. That in the year 2008-2009, the growth rate fell to 6.5%, but it reverted to 8.4% next year, 8.4 even after that. This year again it has slipped, but the challenge is to get it back to the path of 8 and 9 percent. And that is the task that this government has set for itself.
So what is the slogan from this budget, that the government can take to the next state elections and general elections?
I think the budget is an important instrument of macro-economic policy, and faster, equitable, sustainable, and more inclusive growth is the objective of all the economic policies that our government under our leadership has put before the country. That is the challenge: How we ensure that the economy moves on to a faster, sustainable and more inclusive growth path.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine