<div>A combative Prime Minister 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 />He 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 />Attacking BJP for continuously 'opposing and criticising' the government, he said, "If the record of the last nine years is looked at, the principle opposition has never reconciled to the fact that it was voted out of power nine years back."<br /><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><a href="http://www.businessworld.in/news/economy/india/pm-singh-highlights-bright-side-of-crashing-rupee/1057703/page-1.html"><strong>The Bright Side Of Crashing Rupee</strong></a><br /><br />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 "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 although the rupee had overshot in the foreign exchange market its decline would bring some economic benefits. <br /><br /><strong><a href="http://www.businessworld.in/news/economy/india/easy-reforms-over-time-now-for-difficult-ones-pm/1057426/page-1.html">The Tough Reforms Remain</a><br /></strong>The Congress-led United Progressive Alliance government has been pursuing the principal opposition party Bharatiya Janata Party to get through the hike in foreign direct investment (FDI) in the insurance sector, since 2008.<br /> <br />Amid repeated disruptions and din due to clashes between the Treasury Benches and the BJP, the Prime Minister noted that Parliament is the supreme body of the country but if it is not allowed to function session after session, investors' confidence will be affected.<br /><br />Hurt over being targeted by BJP, Singh asked the Chair, "Have you heard of any country where the Prime Minister is not allowed to introduce his council of ministers...<br /><br />"...Have you heard of Parliament in any country where the opposition shouts 'Prime Minister chor hai'. The type of things that have been said here...."<br /><br />Reduce appetite for gold, it's time for difficult reforms: PM<br /><br />At one point, Leader of the Opposition Arun Jaitley shot back saying, "have you heard of any country where the Prime Minister has won the vote of confidence by buying MPs?", triggering uproar.<br /><br />The reference was to the July 2008 Trust Vote sought by the Prime Minister in the wake of Left parties withdrawing support on the Indo-US nuclear deal issue.<br /><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 deregulating diesel prices, allowing Oil companies to fix petrol prices and also capping domestic 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 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 />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," Singh said.<br /> <br />Emphasising that the country's overall public-debt to GDP ratio has been declining, he said India's external debt is only 21.2 per cent of GDP while short-term stands at 5.2 per cent.<br /> <br />"Our forex reserves stand at USD 278 billion, and are more than sufficient to meet India's external financing requirements," he said.<br /> <br />The rupee depreciation, he said, can be good for economy as it will help to increase the export competitiveness and discourage imports.<br /> <br />The foreign exchange markets, he regretted, have a notorious history of overshooting.<br /> <br />"Unfortunately, this is what is happening not only in relation to the rupee but also other currencies," Singh said, stressing that the value of a currency is determined by fundamental of the economy and the government is taking steps to improve them.<br /> <br />Referring to economic prospects, Singh said that even though growth has slowed down in recent quarters, it is expected to pick up.<br /> <br />"I expect growth in the first quarter of 2013-14 to be relatively flat, but as the effects of the good monsoon kick in, I expect it to pick up," he said.<br /> <br />"All in all, the macro-stabilisation process which should support the value of the rupee is under way. I expect that as the fruits of our efforts materialise, currency markets will recover," he said.<br /> <br />Regarding fiscal deficit, the Prime Minister said the government will do whatever is necessary to contain the fiscal deficit to be 4.8 per cent this year.<br /> <br />"The most growth friendly way to contain the deficit is to spend carefully, especially on subsidies that do not reach the poor, and we will take effective steps to that end," he said. <br /><br />(Agencies)</div>
