Trinamool Congress is still part of the UPA; I have still not given up hope that Trinamool Congress will also find its way to support the candidature of Pranab Mukherjee...
A lot of things which are not going right, they have their origins outside India...
Returning from the group of 20 meeting in Los Cabos and the two-day Rio conference, Prime Minister Manmohan Singh faced a volley of questions from media persons ranging from the slump in the economy to the worsening state of the economy to the drama over the next President of the country. Here's the transcript...
Sir, at G20 India indicated contribution of $10 billion to the IMF kitty to sort out Euro crisis but surprisingly even this well intentioned move has been wrongly interpreted in the country. Would you like to say something?
PM: We are members of the International Monetary Fund and we would like the IMF to play an important role in resolving various difficulties that are on the horizon in the international economy and financial system. And if this Fund has to play its requisite role then it has been agreed at Los Cabos that the member countries of the Fund will contribute 450 billion Dollars to enable the IMF to come to the rescue of countries in need. As a responsible member of the international community, it was our bounden duty also to make our contribution. And let me say that before making this announcement I had a discussion among the BRICS leaders and all BRICS leaders have made similar contributions. So I don't think there is anything wrong in our contributing to the IMF. This contribution will be used only when needed and it will also continue to be part of India's reserves.
Sir, during your address in Mexico you spent a long time talking about the sharp slowdown in the Indian economy, putting in place transparent and stable policies, correcting some of the inherent constraints and taking tough decisions including controlling subsidies. Do you think equations have changed enough in the run up to the Presidential polls to push forward some of these tough decisions quickly?
PM: We owe it to our country to take all the necessary decisions which would return the country to a high growth path. There are problems with regard to the fiscal management. We will tackle that problem effectively and credibly. There are problems with regard to management of the balance of payments deficit on the current account. Those problems also we will tackle. It will not be proper for me to talk about these things in detail, but, you have my assurance that I recognise that we have to work our way to restore the momentum of growth that India needs and which the people of India want the Government of India to work for. Also, I think the events of the last couple of days convince me more than ever before that there are no international solutions to the problems of a country of India's size, of India's diversity. So it is obligatory on us, and here I would urge all political parties to work with the Government to restore the momentum of growth that this country is capable of and which this country needs.
I have a question on black money. What was the sense during G20 on black money and has it become irrelevant or has there been any improvement?
PM: It is too early to say one way or the other. The problem is there but there are no magic solutions available. I think it is going to be a slow process.
Sir, rating agencies are continuously showing negative marking to us. In April Standard and Poors has given the rating and now Fitch has given the rating. The retrospective tax reforms are affecting our foreign direct investments. So what are we doing in Vodaphone case as an example. Are there any good signals we are planning to give?
PM: We need foreign investment both portfolio investment and direct investment. If there are any obstacles which come in the way and if there are any policy impediments, we will address those problems effectively and credibly.
Have you now had time to apply as to who will succeed Pranab Mukherjee as the Finance Minister and as the Leader of the House or do you intend holding this portfolio for a while?
PM: I have been churning it in my mind. Quite honestly I have a number of issues which I have to resolve. It will not be proper for me to announce while I am outside the country. When the decision is taken, you will get to know about it.
RBI has kept its rates unchanged in its mid quarterly policy review recently they have said that interest rates might not be the principal factor impacting growth at this juncture and you have talked about external implications and domestic policy issues, which is being called by others as policy paralysis. What is the most important factor that is harming the growth? Do you think fear of stagflation in economy is justified?
PM: There is 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. As regards to the actions of the Reserve Bank, monetary policy is the preserve of the central bank of the country. The Central Bank of India, i.e. the Reserve Bank enjoys autonomy. There are always consultations between the Government and the Reserve Bank. But we respect the Reserve Bank's autonomy and therefore whatever the Reserve Bank says, it requires urgent attention on the part of all concerned.
Are you going to reshuffle your Cabinet soon? Are you going to see some new partners joining UPA?
PM: I think that is a legitimate expectation. You will get to know about it when it takes place.
You said that you are going to take a number of steps to restore confidence in the Indian Economy but three of the most important things are really state subjects- land, energy and water. When we talk to businessmen, they say that without these three things they are unable to proceed with investments. So how does the Central Government propose to resolve issues which can actually be solved by State Governments?
PM: We are a semi federal polity and therefore cooperative federalism makes it incumbent on all political parties, those ruling at the Centre and those ruling in States, to work together to find credible ways and means to get this country moving again on to the high growth path which we have achieved until 2011-12.
Rupee has fallen in last two days to a record low of below 57, the latest update on the monsoon is 26% below normal and our deficits continues to be a challenge. My question to you really is there something that we can expect in days to come and won't you be a better Finance Minister, in the interim at least?
PM: Who will be a Finance Minister you will get to know when that takes place. As regards to the monsoon, I would hate to speculate but let me say we are well prepared to deal with any contingency. If there is a shortfall of food grains that will not affect the availability of food grains. We have record amount of food stock far in excess of our needs and therefore you can depend upon the Government to ensure that if at all, God forbid, there is a shortfall in production, if there is a semi-drought situation, we are well equipped to meet that challenge.
As far as the Rupee is concerned, we are operating a system which is market based exchange rate. We intervene only to curb violent fluctuations. I am confident that measures that I outlined will return Rupee also to a more stable path.
In Rio, you have mentioned that countries that are technically advanced are not transferring technology and are not cooperating. Could you elaborate this point?
PM: International gatherings are an essay in persuasion. The poor countries need more money, more capital to sustain high growth rates for their economies. They also need increased flow of technologies on favourable terms to accelerate the process of their economic growth. Lot of lip sympathy has been paid and is being paid by the developed countries to the idea that we are living in an increasingly inter dependent world and that the developed countries have an obligation to help the developing countries. In practice, the overall situation on ground, as I have pointed out in my speech at the Rio Conference, is not very flattering. So as far as India is concerned, I have already mentioned we must plan our economy in such a manner that we cannot expect outside help on a scale which can see us through our difficulties. We have to raise our economy through our own good steps.
Sir, you have requested all the political parties to help the Government at this crucial time. It seems that your own ally TMC is creating obstacles. Do you foresee any possibility of re-alignment within UPA? How you will overcome these obstacles and what about the monetary package she is asking for?
PM: I cannot discuss domestic politics while I am on a flight outside our country. I am still confident that when it comes to dealing with the basic fundamental problems of our country, all political parties will join hands, whether it is the Trinamol Congress or other parties. I expect each one of them to play their role in moving this country back to the high growth path that we are capable of.
Indian economy is liberalised for 20 years now of which 5 years you were the Finance Minister and then for 8 years you were the Prime Minister. So you know the economy inside out well. What has gone wrong or right in all these years which is now forcing us to debate once again what has gone wrong in all these years?
PM: Let me say that a lot of things which are not going right, they have their origins outside India. The 2008 financial crisis affected our growth rate. Our growth rate fell from 9% to 6.7% and we recovered in next 2 years but then came the Euro zone crisis and therefore there is a flight of capital from large number of developing countries. Capital in search of safety wants to go to Germany, wants to go to the United States and therefore all developing countries, including China, are experiencing a deceleration of growth rates. Having said that let me say that there have been problems in our own country. We have to work harder than ever before in restoring fiscal balance. We have to work systematically to ensure that the balance of payment problem is managed properly and the climate for foreign investment, both direct and portfolio is also favourably motivated.
To keep UPA united and intact, would you request Mamta Bannerjee to reconsider her decision on supporting Presidential candidature and would you appeal to BJP to withdraw their candidate for the Presidential post?
PM: As soon as we decided upon the nomination of Pranab Mukherjee, I rang up L K Advani ji, I rang up Sushma Swaraj ji, I rang up Arun Jaitly ji requesting them to work with the Government and the ruling coalition to ensure that Pranab ji's election takes place unanimously. As far as the Trinamol Congress is concerned, Trinamool Congress is still part of the UPA and I have still not given up hope that Trinamol Congress will also find its way to support the candidature of Pranab Mukherjee.
