Excerpts from the Prime Minister's reply after the responses by various opposition leaders to his opening statement
I am very grateful to all the hon. Members who have raised question s and have asked me to clarify some of the issues raised by them. I respect the hon. Leader of the Opposition, Arun Jaitley ji . I am glad he has recognized that there is a need for consensus.
Building a consensus is the responsibility of both, the Government and the principal Opposition part y. I wish the conduct of the principal Opposition party was consistent, with letting the ruling party govern; while the Opposition performs its task of opposing and criticizing wherever it is necessary. But, if the record of the last nine years is looked at, the principal Opposition party has never reconciled itself that it was voted out of power in 2004 as well as in 2009
Have you ever heard of a situation in a parliamentary system where the Prime Minister of the country is not allowed to introduce the Members of his Council of Ministers. That's what happened in 2004. ...Have you heard of any other country where the Members of the Opposition walk into the Well of the House, shouting: [In Hindi] Prime Minister c*** hai [*Expunged as ordered by the chair]?
Arun Jaitley: Mr. Prime Minister, please tell us, have you heard of any democracy where the Prime Minister won a Vote of Confidence by ****** Members of Parliament [*Expunged as ordered by the chair]?
The Leader of the Opposition has talked about investors having lost confidence in our country. I don’t think that is correct. But I would be the last person to deny that there are certain events and happenings in our country which are a source of concern to investors, both domestic and foreign. And, what are those conditions? Parliament is the supreme body in our country. If Parliament is not allowed to function Session after Session...
P. Chidambaram intervenes: We heard their Leader without interruption. They should hear the Prime Minister without interruption. How can your people interrupt the Prime Minister?
Arun Jaitley: We will hear the hon. Prime Minister without anybody disturbing the hon. Prime Minister. The Prime Minister is entitled to that respect. We would like to know what he intends to do for reviving the economy. We don’t want to hear alibi for failure.
I am not making a partisan point. But if you are worried about the investors’ confidence, both the domestic investor’s confidence and the foreign investors’ confidence, the conduct of Parliament is an important factor which will influence the behaviour of the investors.
Dr V. Maiteryan: The conduct of Ministers is also important
P. Chidambaram: Who says no?
Therefore, Sir, I do recognise that there is a problem, that this problem can be resolved only if the Opposition Party does recognise its responsibility for the conduct of Parliament. This is not something which can be done unilaterally; it takes two to clap and you have my assurance that our Party is very sincere in ensuring that essential legislation, which has a vital bearing on the fortunes of our country in the years to come, is passed by this Parliament with approval. Therefore, this is not an issue which should divide our country. There is a problem that domestic investors are also nervous; there is a problem that foreign investors also get a wrong signal; and, it is the responsibility of all Members of this House to send out a message that India remains a viable, bankable, credit-worthy proposition. That is an obligation, I invite all sections of the House, to respect
The hon. Leader of the Opposition has talked about corruption. Corruption is there and has been there. In recent years, the RTI and the activism of the various agencies of the Government has brought out certain things which are regrettable. But these corruption episodes do not have to be an occasion to disrupt Parliament in a manner that we cannot do our essential business.
There are institutional arrangements in place, various Committees of Parliament; there are courts of the country which can grapple with these issues and let the guilty be booked. Our Government has no desire to protect any guilty person
Dr V. Maiteryan: Files are missing...
No, I am not the custodian of the files of the Ministry of Coal
Dr V. Maiteryan: Sir, you are the custodian of the country...
Therefore, Sir, I appeal to the hon. Leader of the Opposition and all Members of this august House to recognize that there is a collective responsibility. We owe it to our country to send out a message to investors, both domestic and foreign, that India remains a viable, bankable, credit-worthy proposition.
As I have pointed out in my statement, the fundamentals of our economy are eminently sound and we should build on our assets and try to deal with deficiencies. There are deficiencies. I do not wish to deny that. But we have a responsibility to act collectively to deal with this crisis of confidence of this sort.
Shri Raja has referred to inflation. I share the concern about inflation. Inflation hurts the poor. But we have ensured, in the last nine years, that the public sector agencies, which are in charge of public distribution, have not had to face any increase in prices. We have kept the prices of wheat and rice, from the public sector agencies, at more or less the same level as remained in 2003. This is an important measure whose relevance is often not recognized, but I would urge the hon. Members that some rise in prices was inevitable to correct the adverse terms of trade against agriculture. Without agricultural growth, solid agricultural growth, we cannot bring about a health y growth of the economy as a whole, and our experience was that our farmers needed better terms of trade but one consequence of that is that the farm prices had to be raised by an amount which was far in excess of what was done by any previous Government, and that structural inflation has got built into our economy. We have to grapple with it, we will grapple with it, and, fortunately, the fact that we are going to have a good harvest, as a result of a good favourable monsoon, provides an opportunity to deal with food inflation in a manner which was not possible before.
Shri N.K. Singh referred to the action by the Group of 20. I will participate in the Group of 20, and I may say that, whatever some Members of the House may say about me as the Prime Minister, I command a certain status, certain prestige, certain respect in the Council of the Group of 20. Therefore, it is quite clear today that the way the world economy is functioning, there is no adequate coordination of the macro economic policy, monetary and fiscal policy of developed countries and yet we recognize that in increasingly interdependent world, whatever is done in the developed countries sends its shivers in the developing world. So, in a more equitable world order, it is only appropriate that the developed countries, in pursuing their fiscal and monetary polices, should take into account their repercussions on the health of the economies of the emerging countries and other developing countries.
That is a concern that I have been voicing throughout my participation in the meetings of the Group of 20, and I will continue to do so. Sir, Shri Rai mentioned how depreciation is good for the economy. I didn’t say that depreciation is a universally beneficial phenomenon. It has pluses and it has minuses. It is a mechanism of adjustment in an economy, which has got out of balance its macro-economic fundamental, and, therefore, to some extent, it provides a corrective, but there are consequences. As I mentioned in my speech, the rise in the price of petroleum products, the rise in import prices, certainly has consequences in accentuating inflationary pressures, and to that extent, the pressures on monetary policy to take corrective measures also increases, which also, in turn, has consequences on what happens to the climate for investment in the country.
Onion prices are prices which rise and fall depending upon the seasonal trend in production. No Central Government can say that it can control all prices. And, certainly, as Shri Sharad Pawar has pointed out, some months ago, he, as the Agriculture Minister, had written to all State Governments to arrange for storage of onions and yet, no State Government took advantage of that. If they had taken advantage of that, in the lean season the prices would have been more stable than they were.
As for Shri Yechury’s comments that we are back to 1991, I say it with all emphasis at my disposal that we are not at that level. We will not go to that extent. We have no reason to believe that the Indian economy is today back to the 1991 situation. Our fundamentals are much stronger. We have, for example, an exchange rate which is market-determined. We have foreign exchange reserves which are equal to seven months of imports. Therefore, there is no reason for anybody to believe that we are going down the hill and that 1991 is on the horizon.
Prof. Ram Gopal Yadav raised issues with regard to exchange rate adjustment. I have answered some of those issues in the text of my statement. As far as GDP is concerned, the fears that GDP growth in India may go down to three per cent is entirely unfounded. I sincerely believe that this year our grow th rate will be about 5.5 per cent and that we have the ambition, we have the means and we have the resource s and the will power to put the economy back on the rails of high, stable growth rate of six to eight per cent in two-three years to come.
Shri Satish Misra had asked why our exports were falling. Now, our exports are falling partly because of international factors -- the world economy is slowing down – and partly because of the growing un-competitiveness of Indian exports. Fortunately, the recession of the rupee provides an opportunity to, at least, put in place a partial corrective and I, therefore, sincerely hope that our exports will do better in the coming months.
Why foreign investments are not coming? First of all, Foreign Direct Investment is not effective. As far as the speculative flows are concerned, speculators don't calculate what is in the long-term interest of the investor. They are short-term maximizers and, therefore, come and go. Speculators are not the best judges of the health of the economy. Lord Keynes once said, "Speculators are useful and healthy as bubbles on a steady stream of enterprise . But when the enterprise becomes the bubble in the hands of speculators, the job is likely to be undone."
Therefore, I invite hon. Members not to be too much influenced by speculative in flows and speculative outflows, and trust the ability of our Government to tackle India's economic problem with all sincerity and with all conviction.