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Prime Minister Dr. Manmohan Singh Addresses the Nation on Recent Economic Reforms (21.9.12)
My dear brothers and sisters,
I am speaking to you today to
explain the reasons of some
important econonomic policy
decisions the Govt has recently taken.
Some political parties has oppose them.
You have the right to know the truth about
why we have taken these decisions.
No Govt. likes to imppose burdens
on common man,
Our govt has been voted to office twice
to protect the interest of common people.
At the same time
it is the responsibility of the govt.
to defends the national interest and
protect the long term future of our people
it means we must ensure the economy
grows rapidly and that
this generates enough productive job
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.
The challenges that we have to do this
such a time when the world economy
is experiencing great difficulty.
The US and Europe are struggling
to deal with an economic slowdown and financial crisis.
Even China is slowing down
we too have been affected
though I belive
we have been able to limit the effect
of this global crisis.
We are at a point where we can reverse this slow down
in our growth.
we need revival in investor confidence
domenstically and globally
The decisions we have taken recently are
necessary for this purpose.
Let me begin with the rise in the Diesel Prices and
cap on LPG cylinders. We import almost
80% of our oil and
Oil prices in the world market have increased sharply
in the past 4 years
we did not pass on most of the price rise to you
So that we could protect you so that we protect you from the hardship
to the maximum extend possible as a result
the subsidy on the petrolium product has
grown enormasily. it was Rupees 140,000 Crores last year
If we had not acted it would have been over
200,000 Crores this year.
Where would the money for this come from.
MONEY DOES NOT GROW ON TREES
If we had not acted it would have meant
more fiscal deficit
that is unsustainable increase in Govt expenditure
and Govt income. If unchecked this would lead to furher
steep rise in prices and lost of confidence in our economy.
The prices of essentail commodities would raise faster
both domestic and foreign investor
would be reluctant to invest in our economy.
Interest rates would rise, our companies
would not be able to borrow abroad
unemployment would increase.
The last time we face 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 preventive
steps. You can see the positive results of those steps.
We are not in that situation today.
But we must act before people loose confidence
in our economy. I know what happend in 1991
and I would be failing in my duty as
Prime Minister of this great country if I did not take
strong preventive action.
The world is not kind to those who do not
tackle their own problems.
Many European countries are in this position
today, they can not pay their bills.
and are looking to others for the help.
They are having to cut wages and pensions
to satisfy potential lenders.
I am determind to see that India will not be pushed
into that situation. But I can succeed only
if I can persuade you to understand why we had to act
We raise the price of Diesel by just rupees 5
per Ltr instead of Rs 17 that was needed to cut
all loses on Diesel. Much of Diesel is used by big cars and SUVs
owned by rich and by factories and business.
Should Govt should run large fiscal defecit to
subsidise them? We reduce taxes on petrol
by Rs 5 per Ltr to prevent rise in petrol prices.
We did this so that crores of middle class
people who drives scooters and motor cycles are
not hit further. On LPG we put a cap of 6 subsidise cylinders
per year. Almost half of our people who need
our help the most actually use only 6 cylinders or less.
We have ensured they are not affected.
Others will still get 6 subsidised cylinders
but they must pay a higher price for more.
We didnot touch the price of corrosine which is
consumed by the poor.
My dear brothers and sisters, you should know
that even after the price increase
the prices of Diesel and LPG in India are lower than
those in Bangladesh, Nepal, Shrilanka & Pakistan
The total suusidy on petrolium product will still
be rupees 160,000 Crores. This is morethan what
we spend on health & Education together.
We held back from raising prices further
because I hoped oil prices would decline.
Let me know turned to the decision to allow
foreign investment in retail trade.
Something it will hurts small traders, this is
not true. Organized modern retailing is already
present in our country and is growing.
All our major cities have large retail chains
Our national capital Delhi has many new shopping
centers. But it is also seened 3 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 completly baseless
We should also remember that opening of organized retail
to foreign investemt will benefit our farmers.
According to the regulations we have introduced
those who bring FDI have to invest 50% of their money
in building new warehouses, cold storages and
modern transport system. This will help to ensure
that 3rd of our fruits and vegitables which had
presently wasted because of storage and
transport losses actually reach the consumer.
Wastage will go down, prices paid to farmers will go up
and prices paid by consumers will go down.
The growth of organized retail trade will also
create millions of good quality new jobs.
We recogenize that some political parties
are oppose to this step.
That is why state Goverments have been allowed
to decide whether foreign investment in retail
can come into their states.
But one state should not stop another state
from seeking better life for its farmers
for its youth and for its consumers.
In 1991 when we opened India to foreign investment
in manufacturing many were worried, But today
Indian companies are competing effectively both
at home and abroad and they are investing around
the world. More importantly foreign companies
creating jobs for our youth in information technology,
in steel and in auto industry.
I am sure this will happen retail trade as well
My dear brothers and sisters UPA Govt is the
Govt of poor. In the past 8 years our economy has grown
at a record annual rate of 8.2%
We have been ensured the poverty has declied
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.
We must avaoid high fiscal defecits which cause
a loss of confidence in our economy,
I promose you that I will do what everything
necessary to put our 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 put confuse you by spreading
fear and false information.
The same tactics were adopted in 1991
They did not succeed then, they will not succed now
I have full faith in the wisdom of the people of India.
We have much to do the protect the interest of our nation
and we must do it now at a 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 a hard decision
For this I need your trust, your undestanding,
your co-operation.
As Prime Minister of this great Country I ask
each one of you to strengthen my hands so that
we can take our country forward and built better
and more prosperous future for ourself and
for the generations to come. Jai Hind