Prime Minister Manmohan Singh has promised to tackle obstacles that come in the way of foreign investment and to take all decisions necessary to restore the growth momentum in the economy, signalling his intention to give fresh impetus to the stalled reforms process.
“‘We need foreign investment, both foreign direct investment and portfolio investment. If there are any obstacles which come in the way..we will address those problems effectively and credibly,” said the Prime Minister, while answering a question on whether the government was planning to send any ‘good signals’ on the Vodafone tax issue.
The government’s decision to retrospectively tax Vodafone’s acquisition of Hutchison Essar has created an international uproar, but with Pranab Mukherjee stepping down as finance minister, there are hopes that the government may take a relook at this controversial provision.
The Prime minister, who was speaking to reporters on his way home through Pretoria, after attending the G-20Summit and the Rio 20 + conference on sustainable development, said India could not expect foreign help to take care of its problems and would ‘have to raise our economy through our own steps.’
“The events of the last few days convince me more than ever before that there are no international solutions to the problems of a country of India’s size…I would urge all political parties to restore the momentum of growth that this country is capable of and which this country needs,” said Singh, appealing to allies and opposition parties alike to lend support to reforms and growth-oriented policies.
While the Prime Minister did not specify the measures he intended to take, there are a raft of legislations and policy measures, ranging from the pension, banking, and insurance bills to allowing foreign investment in retail and decontrolling fuel prices that that have been pending for a long time.
“We owe it to our country to take all necessary decisions which would return the country to a high growth path. There are problems with regard to fiscal management…There are problems with regard to balance balance of payment deficit on the current account. ..We have to work harder than ever before in restoring fiscal balance. ..We have to work systematically to ensure that balance of payment problem is managed properly..,” he said.
Singh conceded that the economy had slowed down but said there was 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% per annum,” he said.
The Prime Minister said the Euro zone crisis had resulted in a flight of capital from a large number of developing countries, resulting in deceleration of growth rates in developing countries.
(curtsey: economic times)
Rupesh Yatesh Dalal
Head Research Department
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