<div>Fighting for his reputation as the architect of India's economic reforms, a combative Manmohan Singh on Friday, 30 August, made a scathing attack on the BJP in the Rajya Sabha, accusing them of hurting investors' sentiment by repeatedly disrupting Parliament, triggering a war of words.<br /><br />Insisting that the current growth and currency crunch was no repeat of the 1991 balance of payments crisis that made him a household name, the Prime Minister asked the principal opposition party to recognise its responsibility of ensuring smooth functioning of Parliament asserting that it was not the responsibility of the government alone as contended by the BJP.<br /><br />"Building of consensus is both the responsibility of government and the opposition. I wish the conduct of the opposition party was consistent while letting the ruling party govern," he said responding to clarifications on his statement on the sliding rupee. <br /><br /><span style="color: rgb(128, 0, 0);"><strong>Read Also: </strong></span><strong><a href="http://www.businessworld.in/news/economy/india/economic-growth-slips-to-lowest-in-4-years/1058400/page-1.html">Economic Growth Slips To Lowest In 4 Years<br /></a></strong><a href="http://www.businessworld.in/news/economy/india/economic-growth-slips-to-lowest-in-4-years/1058400/page-1.html"><br /></a>As finance minister 22 years ago, he deftly ushered in reforms of a state-shackled economy that helped launch years of rapid growth, earning himself a place in history as the man behind India's emergence as a new economic power.<br /><br />Now 80 years old and heading into his last months as prime minister before elections, the growth bubble has burst. The latest GDP figures on Friday showed an economy growing at just 4.4 per cent, the weakest pace since the global financial crisis and a far cry from ambitions for growth of 8-9 per cent. <br /> </div><div>The country is saddled with hefty fiscal and current account deficits, and the rupee has fallen like a stone in recent weeks to successive record lows.<br /><br />Industry body CII said the GDP figures for the first quarter clearly show that the economy continues to be in the throes of a slowdown. Expressing concern that there are no clear indications that the economy has bottomed out, CII said without getting panicky, the concern on the economy can hardly be overstated. <br /><br />"The economy needs undivided attention of policy makers,” said Chandrajit Banerjee, Director General, CII referring to the first quarter GDP figures released this evening. There are no visible signs of investment pick up as investor sentiments continue to be very low. A weak rupee, tight liquidity, high cost of funds, procedural delays, etc are all co in the way of an investment revival, said CII.<br /><br /><strong>Time For Difficult Reforms</strong><br />The Prime Minister also said the government will now have to undertake more difficult reforms, including reduction of subsidy and implementing GST, to put economy back on the path of stable, sustainable growth.<br /> <br />"The easy reforms of the past have been done. We have the more difficult reforms to do such as the reduction of subsidy, the insurance and pension sector reform, eliminating bureaucratic red tape and implementing Goods and Services Tax (GST)," Singh said while addressing Parliament.<br /><br /><span style="color: rgb(128, 0, 0);"><strong>Read Also: </strong></span><strong><a href="http://www.businessworld.in/news/economy/india/pm-singh-highlights-bright-side-of-crashing-rupee/1057703/page-1.html">The Bright Side Of Crashing Rupee</a><br /><br /></strong>Seeking to sooth the worries about the economy, Prime Minister Manmohan Singh told parliament that the crashing value of the rupee was part of a needed adjustment that would make Asia's third-largest economy more competitive.<br /><br />The speech was the veteran economist's first substantial comment to parliament since the rupee suffered its steepest ever monthly fall in recent weeks, bringing back memories of a 1991 balance of payments crisis that made Singh famous.<br /><br />Reading from a written statement, the Prime Minister promised his government would reduce the <br />"unsustainably large" current account deficit undermining the currency.<br /><br />"Clearly we need to reduce our appetite for gold, economise the use of petroleum products and take steps to increase our exports," he said.<br /><br />But he said that a weaker currency was the natural outcome of several years of high inflation, and <br />although the rupee had overshot in the foreign exchange market its decline would bring some economic benefits. <br /><br /> <span style="color: rgb(128, 0, 0);"><strong>Read Also: </strong></span><a href="http://www.businessworld.in/news/economy/india/pm-attacks-bjp-says-time-for-easy-reforms-over/1057992/page-1.html"><strong>PM Attacks BJP</strong></a><br /><br /><strong>Miles To Go</strong><br />In the insurance sector, the government proposes to increase the FDI cap to 49 per cent from 26 per cent, which the BJP opposes. The main opposition party is also not in favour of raising the FDI limit in the pension sector to 49 per cent.<br /> <br />The Centre has been engaged with states to bring them on board for introduction of new indirect tax regime, GST. The Constitutional Amendment Bill was introduced in Parliament in 2010.<br /> <br />In order to reduce subsidy outgo, the government has taken several initiatives, including partially <br />deregulating diesel prices, allowing Oil companies to fix petrol prices and also capping domestic <br />subsidised LPG cylinder at 9 per family a year.<br /> <br />Besides, to attract foreign funds, it has also hiked FDI limits in various sectors including retail, aviation, telecom, power exchanges, petroleum and natural gas sectors.<br /> <br />Pitching for more reforms, the Prime Minister said easy reforms of the past have been done but the <br />difficult ones remain.<br /> <br />"We have the more difficult reforms to do such as reduction of subsidies, insurance and pension sector reforms, eliminating bureaucratic red tape and implementing Goods and Services Tax," he said.<br /><br />"These are not low hanging fruit and need political consensus... We need to forge consensus on such vital issues. I urge political parties to work towards this end and to join in the government's efforts to put the economy back on the path of stable and sustainable growth," Singh said.<br /> <br /><strong>Blame It On The World<br /></strong>The Prime Minister attributed the sudden and sharp depreciation in rupee to various domestic and global factors like high current account deficit (CAD), US Federal Reserve plans to taper quantitative easing measures and tensions in Syria.<br /> <br />"... the rupee has been especially hit because of our large CAD and some other domestic factors. We intend to act to reduce the CAD and improve the economy," Singh said.<br /> <br />The deterioration in CAD, he said, has been mainly on account of huge import of gold, higher cost of crude oil imports and recently of coal.<br /> <br />Moreover, Singh said that exports have been further hit by collapse in iron ore shipments making "our CAD unsustainably large".<br /> <br />"Clearly we need to reduce our appetite for gold, economise the use of petroleum products and take steps to increase our exports," the Prime Minister said, adding the government will take all possible steps to bring down CAD below $70 billion this fiscal.<br /> <br />The Prime Minister said the medium term objective of the government will be to reduce CAD to 2.5 per cent of GDP and the government will make all efforts to maintain "a macro economic framework friendly to foreign capital inflows to enable orderly financing of the current account deficit."<br /> <br />"... it is important to recognise that the fundamentals of the Indian economy continue to be strong," <br />Singh said.<br /> <br /><br />(Agencies)<br /><br /> </div>
