Prime Minister Manmohan Singh has sought to assure investors of every step, including reforms, to restore confidence on India while also hoping for higher growth, lower inflation and correction in the depreciating rupee.
“We need foreign investment – both portfolio and direct investment,” the prime minister told reporters on his way back from G20 and Rio+20 summits in Mexico and Brazil, when asked about the ratings downgrade of India.
“If there are any obstacles which come in the way, and if there are any policy impediments, we will address them effectively and credibly,” the prime minister added when also asked about the perception of policy paralysis in India.
Manmohan Singh, who has been away to these two summits since Saturday last, said he owed it to the country to take all the necessary decisions that would return the economy to a high growth path.
“There are problems with regard to the fiscal management. We will tackle that problem effectively and credibly. There are problems with regard to management of the balance of payments deficit on the current account. Those problems also we will tackle.”
“It will not be proper for me to talk about these things in detail,” he said when asked about specific measures, but said people wanted growth momentum restored and that he will not disappoint them.
The prime minister also felt that there was no sign of any serious threat to the Indian economy even as he felt the Reserve Bank of India (RBI) was competent to act on interest rates, inflation and the value of the rupee.
“There is no stagflation. There is a slowing down. I am still confident that we can ensure that the growth rate of the economy in the rest of the year will improve to about 7 percent per annum,” he said.
“As far as rupee is concerned we operate in a system that is a market based exchange rate. We intervene only to curb violent fluctuations. I am confident that measures that I outlined will return rupee also to a more stable path.”
The prime minister, who looked relaxed and at ease during the 25-minute media interaction, was also candid enough to maintain there were issues that needed immediate attention, but assured action.
“A lot of things that are not going right they have their origins outside India. The 2008 financial crisis affected our growth. Our growth rate fell from 9 percent to 6.7 percent,” he sasid.
“But then came the Eurozone crisis and therefore there is a flight of capital from large number of developing countries,” he said, adding the money was going to Germany and the US for want of safety.
“Therefore all developing countries, including China, are experiencing a deceleration of growth rates. Having said that let me say that there have been problems in our own country. We have to work harder than ever before in restoring fiscal balance,” he said.
“We have to work systematically to ensure that the balance of payment problem is managed properly and the climate for foreign investment, both direct and portfolio is also favourably motivated.”
While expressing confidence on the Indian economy, he also appealed to all political parties to come forward in pushing forward measures that will restore global investor confidence.
“I am still confident when it comes to dealing with basic fundamental problems of our country, all political parties will join hands, whether it is the Trinamol Congress or other parties. I expect each one of them to play their role in moving this country back to the high growth path that we are capable of.”