PM sidesteps divestment, but says need resources

Written by Economy Bureau | New Delhi | Updated: Jun 10 2009, 05:31am hrs
Prime minister manmohan singh
A day after the UPAs key allies - the Trinamool Congress and Dravida Munnetra Kazhagam - opposed any move towards divesting government stakes in Indias public sector companies, Prime Minister Manmohan Singh avoided making a direct reference to the subject, but stressed the need to raise resources to spend on key development areas.

I am convinced that education, health and environment protection are the means through which we can help our people improve the quality of their living. But all this requires resources and money does not grow on trees. If we have to invest in our flagship programmes, then we need a lot more resources and an expanding pool of resources, Singh said on Tuesday while replying to the debate on the motion of thanks on the Presidents address in Parliament.

Pointing to the 8.6% average growth recorded in the last five years, which allowed the Centre to increase spending on agriculture, rural development, education, health and environment protection, Singh expressed confidence that the economy would grow by at least 7% in 2009-10 and could return to the 8-9% trajectory.

Since our savings rate is as high as 35%, if all of us work together, we can achieve a growth rate of 8-9%, even if the world economy does not do well I am convinced this can be done with the cooperation of all sections of this august House. That will be the direction in which we will be moving, Singh assured MPs.

The fiscal deficit has increased, but I do believe that in the short run, even then we have manoeuvrability to spend more resource on our flagship programmes. I sincerely believe that the finance minister, when he presents his Budget, will unfold the governments strategy in this regard, the PM said.

Singh, however, reiterated that India could not spend its way into prosperity. There is considerable scope to increase public expenditure, particularly on infrastructure projects and that would not lead to inflation, (but) only add to our development growth potential. I reckon that is the right way to deal with the international slowdown, he said.

The PM also warned that Indias investment climate could suffer if terror and internal security issues like Naxalism arent tackled. If terrorism is uncontrolled, if left-wing extremism continues to flourish in important parts of our country, which have tremendous natural resources of minerals, that will certainly affect the climate for investment. As a government, we are committed to doing all that is in our power to ensure that terrorist elements are brought under control.

Reacting to concerns expressed by MPs about Indias relations with China, the PM said, China is our strategic partner. We do not see our relations with China in antagonistic terms. We have a large trading relationship, we consult each other on global issues.