The Prime Minister said the government was committed to pursuing whatever is feasible to deal with black money, tax evasion and corruption, but said it was not a one-shot operation.
Little emerged from the meeting on how the government would tackle the conundrum of slowing economic growth, decline in capital investment and stubbornly high inflation.
Singh promised a strong Lokpal by consensus but was ambiguous on including his office under its purview. He confirmed an impending Cabinet reshuffle, saying it was a work in progress, but declined to say whether there would be significant changes in top positions. As stated by Singh during his February interaction with the media, he said he would be happy to make way for Rahul Gandhi to become the prime minister, but added that the question hadnt yet been put on the agenda or raised by the Congress party.
He attributed the sticky inflation to factors out of my control, such as the spike in global commodity prices, the West Asian crisis and high oil prices. Singh, however, was hopeful that inflation would drop to 6% by March 2012. The wholesale price index, India's main inflation gauge, rose an annual 9.06% in May, above the April figure of 8.66%. With the latest hike in fuel prices, inflation could be close to 10% by July, the Prime Ministers Economic Advisory Council chairman C Rangarajan said recently, adding that inflation could subside after the initial surge and come down to 6.5% by March next year.
Last week, reacting to the news that food inflation had risen to a 10-week high of 9.13% for the week ended June 11 primarily due to a steep rise in prices of milk, eggs, and fruits and vegetables, RBI deputy governor Subir Gokarn had said that one cant delude oneself by believing that transient supply constraints caused the high food prices.
Food inflation was driven by fundamental factors read changes in the demand pattern rather than transitory factors like rainfall, Gokarn had said.
The PM admitted that black money did exist, but questioned the oft-quoted figure of Rs 4 lakh crore. I do not know what is the basis of those calculations. he said. Calling black money a difficult societal problem, he said the average amount of black money being talked about is at least a quarter of the economies of many European countries. On the economy, he said: We are committed to a growth rate of 9- 10% per annum. Our savings rate is about 34-35% of our GDP with an investment rate of 36-37 %. And with a capital output ratio of 4:1, we can manage to have a growth rate of 9%. Singh added that it required strong commitment to development and modernisation of infrastructure, a strong commitment to modernising and making our education system more relevant to the needs of our time and a universal healthcare system. On poverty and denial of opportunities, he said: Entitlements have a role, but quite frankly, (it is) a limited role. Stating that the country needed system reforms, he said if the UIDAI could give unique ID numbers to all our residents, the country would have discovered a new pathway to eliminate scope for corruption and leakages in the management and distribution of various subsidies. Singh asserted that he was a not a lame-duck Prime Minister as alleged by a propagandist Opposition. He agreed to subject himself to the jurisdiction of a strong Lokpal, but only to dent that offer by saying that many of his Cabinet colleagues would not welcome that idea for fear that it would create an element of instability that could go out of hand. There were divergent opinions on the matter, he noted, adding that he would like to be guided by political parties. Singh also mentioned that Tamil Nadu chief minister J Jayalalithaa and Punjab chief minister Prakash Singh Badal had both favoured keeping the office of PM out of Lokpal's purview. We need a strong Lokpal although it is not a panacea (for corruption), he was quoted as saying. Bringing the higher judiciary under the Lokpal's purview would be against the Constitutional scheme of things, he said. Singh admitted that corruption was a major issue, adding there would be people who deliberately do wrong things. He, however, had an advice to the Comptroller and Auditor General and Parliamentary committees which analyse issues of corruption post facto. We take decisions in a world of uncertainty and thats the perspective I think Parliament, our CAG and our media must adopt if this nation is to move forward. Singh also did not hide his displeasure at the way the media portrays his government. The media has come to behave like accuser, prosecutor and judge rolled into one, he said. As the government fights the backlash from sundry scams, investors are worried it is not paying attention on pushing reforms to support long-term economic growth. Issues on the agenda for long but remain unresolved include a overhaul of land acquisition policy, indirect tax reform through the Goods and Services Tax and allowing foreign direct investment in multi-brand retail.