New Delhi, Sep 21: In a 17-minute speech, Prime Minister Dr Manmohan Singh today appealed to countrymen to strengthen his hands to speed up reforms and avert economic slowdown, which the US and European countries are presently facing.
In a nationally televised address, first in Hindi and followed by English, Dr Singh said, diesel price hike was necessary otherwise the fiscal deficit would have increased. "Money does not grow on trees", he said.
The Prime Minister said, India imported 80 per cent of its fuel consumption, and diesel was being widely used for SUVs too. "We needed to raise the diesel price by Rs 17 per litre, but to cushion the impact we raised it only by Rs 5", he said.
"Similarly, a cap of 6 LPG cylinders per household was put because it was found that nearly half the population belonging to lower middle class and weaker sections was using six LPG cylinders a year ", the Prime Minister said.
The government, he said, was bearing Rs 1.80 lakh crore fuel subsidy, and if the diesel price had not been hiked and LPG subsidy was not slashed, it could have gone up to Rs 2 lakh crore, causing a huge fiscal deficit, Dr Singh said.
If we had failed to bridge our fiscal deficit, investors, both foreign and domestic, would have lost confidence in our economy. This exactly happened in 1991 when no country was ready to give us loan for bailout, as our fiscal deficit had widened. We had then decided to take strong steps, Dr Singh pointed out.
On the government's decision to allow foreign direct investment in multi-brand retail, Dr Singh said, baseless fears are being generated among the people to say that a large number of shopkeepers would be rendered jobless.
"There is enough space for both retail shopkeepers and organised and modern retail in our economy. There already exists an organised and modern retail in India, and this has not harmed local shopkeepers.
"Moreover, with the influx of foreign investment in retail sector, it will benefit farmers who would get better prices, consumers would get goods at cheaper rates and millions of youths would get jobs", the Prime Minister promised.
Dr Singh appealed to the people not to listen to the Cassandras and strengthen his hands in carrying out urgent economic reforms to achieve higher rate of growth, which would help in averting an economic slowdown.
Justifying the recent decisions on FDI and diesel price hike, the Prime Minister said, the time has come for “hard decisions” and asked the countrymen not to be misled by those trying to confuse them by spreading fear like in 1991.
Singh insisted that the concerns over allowing FDI in retail were “baseless” as there is enough scope for big and small retailers to grow.
Noting that fears had been created in 1991 when he as Finance Minister had initiated economic reforms, Dr. Singh said those behind the scare “did not succeed then” and “they will not succeed now“.
He justified the hike in diesel price and cap of six cylinders on subsidised LPG, saying these were required in the difficult economic situation and to avoid increase in fiscal deficit that would lead to steep rise in cost of essential commodities.
“No government likes to impose burdens on the common man... At the same time, it is the responsibility of the government to defend the national interest, and protect the long term future of our people,” Dr. Singh said.
“We have much to do to protect the interests of our nation and we must do it now. At times, we need to say ‘no' to the easy option and say ‘yes' to the more difficult one. This happens to be one such occasion. The time has come for hard decisions,” he said, adding, “for this, I need your trust, your understanding and your cooperation.”
He recalled that the last time the nation faced this problem was in 1991. “Nobody was willing to lend us even small amounts of money then. We came out of that crisis by taking strong, resolute steps. You can see the positive results of those steps,” he said.
“We are not in that situation today, but we must act before people lose confidence in our economy,” Dr. Singh said.
Underlining that the government was at a “point where we can reverse the slowdown in our growth”, he said, “We need a revival in investor confidence domestically and globally. The decisions we have taken recently are necessary for this purpose“.
A tough-talking Prime Minister said, "money doesn't grow on trees. If we had not acted, it would have meant a higher fiscal deficit."
He told the nation that he would do "everything necessary" to put the country back on the path of high and inclusive growth.
"But I need your support. Please do not be misled by those who want to confuse you by spreading fear and false information," Singh appealed to the countrymen, adding he had full faith in their wisdom.
"As Prime Minister of this great country, I appeal to each one of you to strengthen my hands so that we can take our country forward and build a better and more prosperous future for ourselves and for the generations to come," he said.
Contending that his government has been voted to office twice to protect the interests of the 'aam admi', the Prime Minister said, "we must ensure that the economy grows rapidly" which would generate enough productive jobs for the youth of our country.
"Rapid growth is also necessary to raise the revenues we need to finance our programmes in education, health care, housing and rural employment," he said.
While justifying the hard decisions of the government, Singh referred to the "great difficulty" being encountered by the world economy with even the US and Europe struggling to deal with an economic slowdown and financial crisis. Even China is slowing down, he said.
"We too have been affected, though I believe we have been able to limit the effect of the global crisis," Singh said.
Recalling that in the past eight years the economy has grown at a record annual rate of 8.2 per cent, the Prime Minister said the government has ensured that poverty has declined much faster, agriculture has grown faster, and rural consumption per person has also grown faster.
"We need to do more, and we will do more. But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficits which cause a loss of confidence in our economy," Singh said.
Referring to the crisis witnessed in 1991, he said, "I would be failing in my duty as Prime Minister of this great country if I did not take strong preventive action."
He said he was determined to see that India is not pushed into a situation like the one encountered by Europe where many countries are not able to pay their bills, have to cut wages or pensions and are looking to others for help.
"But I can succeed only if I can persuade you to understand why we had to act," Singh underlined.
Referring to the decision to allow foreign investment in retail trade, he said, "Some think it will hurt small traders. This is not true."
He noted that organised, modern retailing is already present in the country and growing, with all major cities having large retail chains.
Talking specifically about Delhi, Singh said it has many new shopping centres but has also seen a three-fold increase in small shops in recent years.
"In a growing economy, there is enough space for big and small to grow. The fear that small retailers will be wiped out is completely baseless," Singh asserted.
He said the opening of organised retail to foreign investment will benefit farmers.
"According to the regulations we have introduced, those who bring FDI have to invest 50 per cent of their money in building new warehouses, cold-storages, and modern transport systems.
"This will help to ensure that a third of our fruits and vegetables, which at present are wasted because of storage and transit losses, actually reach the consumer. Wastage will go down; prices paid to farmers will go up; and prices paid by consumers will go down," he said.
