Rising fiscal deficit worrisome, says Manmohan

Infradevelopment is urgent need

Stressing that the burgeoning fiscal deficit, that blocks investments, should be tackled, Prime Minister Manmohan Singh on Thursday said infrastructure should be developed to keep pace with the country’s economic growth.

In a meeting with his reconstituted 77-member Council of Ministers here, Singh called for working out ways to tackle these problems on a priority basis. He said fuel supply arrangements, security and environmental clearances and financial difficulties were among the “constraints” in achieving the 12th Plan infrastructure investment target.

The prime minister’s concerns over reining in fiscal deficit came a day after the official data showed India’s fiscal deficit falling 65 per cent of the budget estimate for 2012-13 in the first seven months till September. “We will have to overcome the constraints that currently deter or slowdown investment… The growing gap between demand and supply of energy has emerged as a major constraint on our development. It is a major factor in widening the deficit on current account of our balance of payments as well as the fiscal deficit,” he said.

India proposes to invest over $1 trillion to improve its creaky infrastructure during the 12th Five-Year Plan that runs between 2012-13 (Apr-Mar) and 2016-17.
However, the country’s economic growth rate has outpaced that of infrastructure development. One of the few sectors that have improved over the years are telecommunication and postal services.

Manmohan Singh said India needs to strengthen its resolve to meet the challenges before it. He also recalled the achievements of UPA government in the last nine years in social and economic sector. He said schemes like MNREGA and Aadhar, combined with a robust economic growth, had helped to enhance social sector spending.

“While we should take justifiable pride in our successes, it is important to recognise that we are also experiencing the fallout of difficult economic conditions worldwide... As a result, our growth has decelerated, our exports have fallen and our fiscal deficits are expanding. Of particular concern is the fiscal deficit, which is too high and acts as a deterrent for domestic and foreign investment," he said.

Asking senior colleagues to allocate work for junior ministers, Singh said a number of “energetic and younger” people have now joined the Council of Ministers.