M.K. Venu: Mr. Prime Minister, what are your first thoughts on the budget?
Manmohan Singh: Given the challenges facing our economy, the finance minister has done a commendable job. India needs to create jobs for our growing labour force to the extent of about 10 million persons every year. To do that, we need to accelerate the tempo of our growth. We need, as the 12th Five Year Plan has mentioned eloquently, a growth rate of about 8 percent. This is a growth rate which is consistent with our underlying potential. We have to get there. Although this is a difficult journey— it cannot be accomplished in a single year— but the finance minister, has taken important steps to reverse the pessimistic view with regard to investment climate, with regard to the growth potential and possibilities of our economy.
What reforms are you looking at in the six months ahead?
Well. The finance minister has laid out a roadmap. There is plenty of food for every ministry to chew upon. And each one of our ministries has to ask itself this question: If India needs an 8 percent growth rate, growth which is at the same time inclusive and sustainable, what is it that each ministry should do ? The finance minister has, I think, mentioned these challenges. It is up to the collective wisdom of my Council of Ministers to convert these challenges into opportunities to accelerate the tempo of growth, to make it more inclusive, to make it more sustainable.
Will your government get adequate support in Parliament? There seems to be a perceptible change in the attitude of the Opposition. But is the bureaucracy on board? Are projects being cleared?
There have been problems with regard to clearances, with regard to environmental clearances, with regard to forest clearances, land acquisition problems, many of these areas are the responsibility of the state government. Whatever is within the realm of possibilities of the central government’s action points, we have committed ourselves that we will use the mechanism of the Cabinet Committee on Investment to grapple with these tensions which exist in our system, and to ensure that roadblocks, whether they are environmental clearance roadblocks, or forest clearances, or other roadblocks, they are dealt with, so that they can be cleared and removed.
You are confident that a positive climate is there for projects to be cleared?
Well. I think he is speaking on behalf of the Cabinet. And I am pretty certain that the mood of the country is: this country must not lose any time. It must get its act together to accelerate the tempo of economic growth, sustainable growth, equitable growth, and I do believe that if the general mood of the country is right, it will infect the bureaucracy, it will infect the opposition, and in this task, there are no winners or no losers. If India succeeds in sticking to a growth path of 8 percent or more, I think the winners will be the people of India; winners will be our young men and young women, who desperately need new productive job opportunities.
How worried are you about structural deficiencies that have crept into the economy?
There are today, three types of barriers, which can affect the realization of the growth potential. One is the fiscal deficit. The finance minister has charted a path to bring the fiscal deficit under control, and if we succeed in that quest, I think we would have created a better climate for investment; we would have created a better climate also for more moderate levels of inflation than we have had in the last two years.
The second problem is that inflation has gone out of hand. Therefore, if the fiscal deficit is brought under control, it will also enable us to moderate the pace of inflation.
The third is, the Current Account Deficit. We cannot reduce the current account deficit in one go. As the finance minister mentioned, we have a Current Account Deficit of about 75 billion dollars. In the short run, it has to be financed. In the medium run, it must be reduced. We must reduce our dependence on imports of oil, of coal, of gold, of petroleum products. This is a medium term objective, and it can be achieved, partly by reducing unwanted imports, partly by boosting the country’s export effort.
So a multi-pronged strategy has to be in place to achieve credible answers to all these three problems— tackling the fiscal deficit, tackling the inflation problem, tackling the Current Account Deficit
What is a safe Current Account Deficit for us?
In my view— 2.5 to 3 percent of GDP is a safe level of Current Account Deficit.
What do you see as the GDP growth in the coming fiscal?
The finance minister has mentioned, and yesterday’s Economic Survey also hints, that it is realistic to assume a growth rate of about 6.2 to 6.7%, and that in three years time, if we work hard, if the world economy also improves, we should get back to the 8 percent growth path— in two to three years time.
The transcript of the Prime Minister's post-budget interaction with Doordarshan News appears here courtesy PIB