PM promises cut in subsidies, fiscal deficit

Talking tough on removing subsidies that bleed the exchequer, Prime Minister Manmohan Singh said that his government would take tough decisions on subsidy control which would reduce fiscal deficit.

"Like other countries, we too allowed the fiscal deficit to expand after 2008 to impart a stimulus. We are now focussing on reversing the expansion. This will require tough decisions, including controlling subsidies, which we are determined to take," Singh said at the G20 summit here.

The Unique Identification Number being created for each and every Indian would come in handy for subsidy control. The massive database, Singh informed the world leaders gathered at this Mexican beach town, would facilitate delivery of a whole range of financial and other services, through effective targeting and reduced leakages in subsidy schemes.

India also focused heavily on infrastructure investment and set ambitious targets to keep infrastructure investment on track. A problem resolution mechanism has also been put in place to overcome implementation bottlenecks.

Internal constraints due to political compulsions, together with the global downturn that adversely impacted capital flows, restricted the UPA government’s reform agenda. With ally Trinamool Congress and its supremo Mamata Banerjee losing face (and possibly influence) by opposing Congress’s presidential candidate, Singh said that the government was ironing out internal constraints to help improve its economic performance.   
“Our growth rate in 2011-12 declined to 6.9 per cent from the level of 8.4 per cent  in the previous year. This may look like a reasonable figure, given growth rates being experienced in the rest of the world, but our public is impatient for a return to high growth and faster jobs creation. The fundamentals of the Indian economy remain strong and we are confident of bringing back the rhythm of high growth of 8-9 per cent per annum,” he said.

“We are determined to create an environment that would boost investor sentiment and promote an atmosphere conducive to enterprise and creativity. Our policies will provide a level playing field to both domestic and foreign investors,” Singh informed the G20.

Hours before commencement of the summit, Singh attended a BRICS meeting in which leaders agreed to consider “currency swapping” as an option to avoid any such economic downturn in the future.

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