PM on scams, corruption and growth

• I have no. . .  magic wand to reduce prices when global commodity prices are riding high
• People want the guilty punished, and they will be punished
• If Mr (Mukesh) Ambani has done anything wrong, corrective action will be taken
• What worries me most is, if the government is besieged, growth impulses would weaken

Prime Minister Manmohan Singh is worried by the 'permissive' mood that has been created in the country, in which the government is unable to implement its agenda because of a constant barrage of criticism in which facts are mixed with opinion, with the media playing the role of 'accuser, prosecutor and judge'.

This became clear when, breaking his silence of many months, Singh met five editors at a 90-minute interaction on Wednesday morning.

However, it also became clear as the session wore on that the prime minister continued to have an active economic agenda, and that he was fully engaged with a range of domestic and international issues.
Singh's mood lifted noticeably during the interaction.

He began on a somewhat worried note but became cheerful towards the end, fielding questions with disarming frankness.

The interaction dwelt on the national mood, corruption and the Lok Pal Bill, persistent inflation, his reform agenda, his failure to prevent scams, the uncertain international economic and political situation, and many current political issues.

Click NEXT to get a gist of the prime minister's comments on some key issues. . .

On the national mood

In his opening remarks, the prime minister referred to the 'growing perception' that the government was not able to implement its agenda, and blamed it on an atmosphere in which the media was the accuser, prosecutor and judge.

"That way, no parliamentary democracy can function."

He said decisions had to be taken when you didn't know all the facts, but post mortems were done by the CAG, Parliament and the media who had more facts than those who took the decisions.

In this environment, it was difficult to operate.

Repeating that 'we live in a world of uncertainty', where you were doing well if five out of 10 decisions turned out to be right, Singh said an environment must be created in which ministers and civil servants were not discouraged from taking decisions, and the animal spirits of entrepreneurs not dampened.

"We need a rapidly expanding economy, we have to create 10 to 12 million jobs a year."

If the government is 'besieged', cynicism would result and then growth impulses would get weak. "This worries me the most."

The country must reform and strengthen the regulatory system, and minimise corruption in public procurement through a new law.

. . .

On his reform agenda

Asked to spell out his government's reform agenda for the next eight to nine months, he rolled out a lengthy list of about 10 items, all aimed at maintaining the momentum of growth, and ensuring that infrastructure does well.

He said there would be a new law on bringing transparency to public sector procurement, and new laws also on the management of scarce resources, including land.

He hoped to have 'a workable draft' of the food security law, for which the annual grain requirement would be about 57 million tonnes, against which procurement in the last two years had averaged 55 million tonnes.

He said there was a 'large agenda' on education and health.

A Planning Commission group was working on a universal health insurance system, while a lot of work was going on with regard to skills enhancement.

. . .

He laid great store by Nandan Nilekani's Unique Identity scheme, which he felt would reduce leakages in the disbursement of subsidies.

He said there had been a consensus until recently on the Goods and Services Tax, but now the Bharatiya Janata Party was playing politics on this landmark legislation.

He also blamed the BJP for not being able to go ahead with permitting 49 per cent foreign ownership in insurance, for which the Bill was before Parliament.

"We hope to persuade the opposition," he said, and recalled that the Congress had helped the then NDA government to introduce 26 per cent foreign equity in insurance.

He said the supply chain for food items needed to be improved, and hoped that allowing foreign investment in retail networks would help the process.

However, he recognised the fears of small traders, and the need to remove institutional barriers in order to improve the supply chain.

These issues, he said, 'are uppermost in our minds', and that with the existing savings and investment rates, 9 to 10 per cent growth was possible.

"It required strong commitment to modernising infrastructure and making education more relevant."

. . .

On inflation

Asked how, with all his experience in economic management, he had gone wrong on inflation, he said he could not have anticipated that the US would inject so much liquidity into the system, or foresee the turmoil in the Middle East, which had impacted oil prices, or the commodity price surge.

"I have no control over these variables, and no magic wand to reduce prices when international commodity prices are riding high."

With respect to food inflation, he said that his government had increased foodgrain procurement prices to a degree that had never been done before, and this was responsible for agriculture being in good shape.

"We cannot force farmers to part with their produce at unremunerative prices." He felt that if oil and other commodity prices came down, inflation would be no more than 6.5 per cent by March.

. . .

On his failure to prevent scams

Asked whether, with the benefit of hindsight, he should have taken a tougher stance with coalition partners on corruption issues, he said 'yes' but added that he didn't really know if the troubles could have been avoided.

He repeated the point that things happened in telecom without his getting the full picture. He said even after someone complained to the CVC, and then the CBI began investigating, the CBI never told him that they had found anything against the minister.

Asked whether he hadn't read the daily newspapers on what was happening in the telecom department, he said he couldn't spend his time reacting to what the newspapers said.

In any case, there were intense rivalries and even members of Parliament were writing to him with opposite points of view.

He said such rivalries had 'played havoc' with the government's ability to take decisions.

He emphasised that ministers were free to run their departments, and pointed out that Maran had not called a particular's group's meeting for a whole year.

Also, if a Cabinet colleague wrote to him three times that he was going by all the rules, he had to accept what was stated.

. . .

KG gas, CAG and Mukesh Ambani

Asked to comment on the Krishna-Godavari gas issue and the draft report of the Comptroller and Auditor General, he said it would be premature to comment as it was only a draft report.

He pointed out that it was a special audit commissioned by the ministry of petroleum and natural gas.

He said Mukesh Ambani had met him recently, and it was a fact that he had demonstrated domestic capability in developing a complex gas field, in difficult operating conditions, which till now was a capability only with the international companies.

He said any other country would honour such achievements, but added that if Ambani had done anything wrong, corrective action would be taken.

He criticised the CAG for the leaks that had taken place, for holding a press conference which he said was unheard of, and for going into policy issues that were not a part of its Constitutional mandate.

He complained about the 'permissive' system that had been created in the current environment.

. . .

On corruption

He admitted that corruption was a big issue, and that the telecom scam and the Commonwealth Games had caused genuine concern.

"These cannot be wished away, people want the guilty punished, and they will be punished."

Black money too was an issue, he said, but added there was no basis to figures like Rs 4 lakh crore (Rs 4 trillion) said to be lying overseas.

He also asserted that it was wrong to believe that these problems had instant solutions.

He pointed out that black money exists even in European countries, where 'at least 25 per cent' of the economy was untaxed, and people avoided social security payments.

He said new tax agreements were being worked out with different countries, and India had fought hard in the G-20 forum to reduce excessive bank secrecy.

. . .

He said a Lok Pal was desirable, but not a panacea, and he would work to evolve a broad-based national consensus.
He recognised that there were differences, but felt there were mechanisms to resolve them.

Spelling out his own position, he said he had no problem with being covered by the Lok Pal, but his Cabinet colleagues had told him that they were legislating for the future too, and bringing the prime minister within the Lok Pal's purview could create instability.

In any case, he said, a prime minister can be voted out at any time, and there was no greater accountability than that.

He also questioned the idea of having '15,000 investigators' under the Lok Pal, independent of the existing investigating agency, and said it was better to focus on corruption in high places rather than cover every single official.

. . .

He added that having the higher judiciary under the Lok Pal would run counter to the Constitutional scheme, and said there would be new, separate laws on judicial accountability and on the selection of judges.

He added that he was not adamant on these issues, and he wanted the views of all political parties.

"We should encourage good ideas, from wherever they come."

He had respect for members of civil society, he had taken the trouble to interact with them, and his impression had been that Anna Hazare had been happy with their meeting in March.

. . .

"But there are forces controlling him. . .  No group can say that their views have to be accepted, A to Z."
He said he worried about 'the forces that we have unleashed', and did not want a police raj to be established. Nor did he want a situation where everybody is policing everyone else.

"We will not bring back the licence permit raj."

He said nothing should be done that would threaten the unity and integrity of the country, and that 'in moments of anguish' he would read Pandit Nehru's letters to chief ministers in which he kept stressing the point.

. . .

The international scene

The international situation is not comfortable, the prime minister said.

Growth impulses were weakening in the US, there was a sovereign debt crisis in Europe, and no one knew whether the euro zone would survive, and what the consequences might be if it did not.

He added that what was happening in the Middle East was of direct concern to India, not just because of 6 million Indians there but also because 70 per cent of India's oil came from West Asia and North Africa.

The country's immediate neighbourhood was a worry too, he said.

Pakistan was going through a difficult phase, after the killing of Osama bin Laden, and while the army was the most stable institution in that country, people were not asking questions about the army's role in the country.

. . .

He felt that terrorist organisations in that country continued to have the support of the ISI, but that India had to engage with Pakistan and keep talking, because there was no other way.

There were no new tensions with China, and he was convinced that the present Chinese leaders were men of peace, who don't want conflict with India.

He asked the media to not blow the Brahmaputra issue out of proportion; the dam that the Chinese were building was run-of-the-river and in any case much of the water carried by the Brahmaputra came from its catchment area within India.

He explained that the Chinese don't understand that what the media in India says is not at the government's behest, and they read the wrong signals in media coverage.

The Prime Minister also noted that next year China would have a new leadership, and that the People's Liberation Army was acquiring greater autonomy.