'We Need System Reforms'

The full text of the Prime Minister Dr. Manmohan Singh's opening remarks at the interaction with newspaper editors today

I think that there is a growing perception that this government is in siege, that we have not been able to deliver on our agenda. An atmosphere has been created in the country - and this I say with all humility the role of the media today in many cases has become that of the accuser, the prosecutor and the judge.

Now that way no Parliamentary democracy can function and I would like to tell you that if you are taking governmental decisions, particularly big macro decisions, we don't know all the facts and yet we have to take decisions.

When I was a student at Cambridge, Sir Paul Chambers, who was then the chairman of Imperial Chemical Industries, came and addressed us on who is a good manager, who will be considered by industry as a good manager.

He told our student group that, in an uncertain world in which we live in, if 5 out of 10 decisions that I take ex-ante turn out to be correct ex-post that would be considered as a job well done.

If out of 10 decisions that I take, 7 turn out to be right ex-post that would be considered an excellent performance. But if you have a system which is required to perform 10 out of 10 cases I think no system can be effective and satisfy that onerous condition.

We live in a world of uncertainty and ex-post whether it is the Comptroller and Auditor General, whether it is a Parliamentary committee then they analyse post facto. They have a lot more facts which were not available to those who took the decision.

I am not saying that it is not possible that some people may deliberately do wrong things, but in many cases it would turn out in that sort of a scenario it is very difficult to operate. So we must create in this country an environment in which governments, ministers and civil servants will not be discouraged from taking decisions in the national interest when all facts are not known, they will never be known.

We take decisions in a world of uncertainty and that's the perspective I think Parliament, our Comptroller and Auditor General and our media must adopt if this nation is to move forward.

Our basic task is to deal with poverty, ignorance and disease which still afflict millions and millions of our citizens and whatever the ideological moorings of different parties, there is nobody who would say that you can satisfy all these aspirations of the people except in the framework of a rapidly expanding economy which is able to create 10 to 12 million jobs.

For this, we need skilled citizens and we need to put in place a system of skill formation in education which is going to create employable skills which alone can provide our people the security of jobs that they need.

We have put in place an entitlement system. Entitlements have a role, but quite frankly there is a limited role. In the institutions of social security that we are trying to build, there are a large number of leakages in health, in education, and the allocation of subsidies. Our challenge is to plug these leaks and we will do that.

Corruption is a big issue. It has caught the imagination of the people, and we will deal with it. Let me say that while the Lokpal is an essential and desirable legislation, we will honestly work to evolve a broad based national consensus so that we have a viable statute in place which will give us a strong Lokpal. We have differences, there will be differences, but there are mechanisms to resolves these differences.

I certainly respect members of the civil society. It is out of my respect for members of the civil society that whether it is Anna Hazare or Swami Ramdev, I myself took the trouble to interact with them.

In February-March itself I had an hour long meeting with Anna Hazare, the Bhushans, both father and son, Kejriwal and Kiran Bedi. They were all there and I assured them that we are committed to come with the bill in the Monsoon Session and it was not a commitment made under duress.

I had mentioned it to them at that time itself. I said we will introduce a Bill in Parliament but then it is for Parliament to pass it or amend it and that right cannot be taken away.

In the same way people talk about black money. Black money exists, but if you look at all European countries also the average amount of black money which is talked about is at least 25 per cent of the economies of a large number of European countries.

These are transactions that are not taxed and intended to avoid social security payments. But this is a reality. We can deal with corruption, we can deal with black money but quite frankly it is wrong for anyone to assume there is a magic wand which will lead to an instant solution of these difficult societal problems.

We need system reforms. If the project Nandan Nilankani has promised to design, if the Unique Authentication Authority of India can give unique ID numbers to all our residents we would have discovered a new pathway to eliminate the scope for corruption and leakages in the management and distribution of various subsidies to which our people are entitled. But it will take time.

It cannot be done instantly.

Four lakh crores or whatever the figures or black money being mentioned... I do not know what is the basis of those calculations. Whatever is possible is being done. We are in the process of negotiating double taxation avoidance agreements, tax information agreements and we have fought hard in the Group of 20 to see that the secrecy of tax saving banking systems should be modified.

This is not a one shot operation. We are doing all that is possible and we could accelerate it. We are committed to pursue all that is fiscally possible to deal with these problems of black money, problems of tax evading money and corruption.

But there are other instruments. Tax evasion is one important source of generation of black money. But there are other issues -- narcotics, trafficking in human beings -- all these illegal activities.... we need a strong mechanism to track down these criminal elements.

But in all these my worry is to avoid a situation when we convert this vast country of over 1.2 billion people into a state where everybody is policing everybody else. We must not bring back the license permit raj which we sought to abolish in 1991.

I think our nation has prospered as a result of that. If you look at the list of top 100 firms today you will find a sea change in that list today. New entrepreneurs have come into the list. These are some of the gains of liberalisation which we must cherish, we must nurse and we must develop.

We are committed to a growth rate of 9 to 10 per cent per annum. Our savings rate is about 34 to 35 per cent of our GDP with an investment rate of 36 to 37 per cent And with a capital output ratio of 4:1 we can manage to have a growth rate of 9 per cent.

It requires strong commitment to development and modernisation of our infrastructure; a strong commitment to modernising and making our education system more relevant to the needs of our time; it requires strong commitment to work for a universal health care system. We are now engaged in looking at how insurance can be expanded to cover all elements of our population.

These are some of the priorities of our government. But frankly speaking in our country this constant sniping between government and opposition or if an atmosphere of cynicism is created all round I think the growth impulses, the entrepreneurial impulses of our people will not flourish and that is what worries me.

We must do all that we can to revive the animal spirits of our businesses. And the fact that businessmen cut corners is partly a reflection of the loopholes in our regulatory system. We must therefore reform and strengthen the regulatory system where there is a need to do so.

And when it comes to the management of natural resources we need a regulatory system but it must be transparent and it must be functional and that is the next step of our government.

Despite corruption in public procurement we are committed to work towards a public procurement law which will make procurement a transparent operation, and will eliminate to the extent possible the scope for corruption.

But in the situation that we are faced today, day in day out I think we are described as the most corrupt government. There have been aberrations. But quite frankly I have been a civil servant all my life, except the last 20 years.

What surprises me is not that there are corrupt civil servants but that despite all the temptations, so many of our civil servants remain honest and lead frugal lives and this is the mainspring that we have to tap.

We must punish the wrong doers but we must not paint all civil servants as babus and contemptuously describe them as a despicable class.

These are the concerns that I have and I would like to hear from you what you think of them and what we should be doing.

And let me say on the international front I think the situation is not that positive. The international global recovery is fragile. Even the United States growth rate is faltering.

In Europe it is the sovereign debt crisis, the problem of the Greek crisis and whether the Euro-zone will survive or not. If it will not survive it will be a major institutional collapse.

What is happening in the Middle East is of direct concern to us. Apart from the fact that we have 6 million Indians working in the Middle East nearly 70 per cent of our oil supplies come from the countries of the Gulf and North Africa. What turn these events will take nobody knows.

So we have to swim against this adverse tide and therefore India requires all the energy and all the cohesiveness of our polity to swim against these tides and come out victorious. We can do it.

We showed that in 2008 when most people believed that our financial system would also be a victim of the global financial crisis. We put in place correctives and we managed to retain a growth rate of 7 per cent and next year it was back to 8 to 8.5 per cent. We must have the vision, the ability and the determination to prosper even when the world environment is hostile.

And because nature has blessed us with a large common market, if we can put in place the goods and services tax legislation and if we can remove barriers to interstate commerce that itself will create new opportunities internally for accelerating the tempo of growth.

These are our top priorities, these are national priorities and I invite you as very influential members of our polity to help the government to deal with these problems with courage, with clarity and with determination.