PM calls on President, discusses political situation

"Where would the money for this have come from? Money does not grow on trees. If we had not acted, it would have meant a higher fiscal deficit, that is, an unsustainable increase in government expenditure vis-a-vis government income. If unchecked, this would lead to a further steep rise in prices and a loss of confidence in our economy," said Dr. Singh in his address to the nation. "The prices of essential commodities would rise faster. Both domestic as well as foreign investors would be reluctant to invest in our economy. Interest rates would rise. Our companies would not be able to borrow abroad. Unemployment would increase," he added.

Emphasizing that the nation faced a similar problem earlier in 1991, Dr. Singh said: "Nobody was willing to lend us even small amounts of money then. We came out of that crisis by taking strong, resolute steps. You can see the positive results of those steps. We are not in that situation today, but we must act before people lose confidence in our economy." Dr. Singh said the price of diesel was raised by just Rs. 5 per litre instead of the Rs 17 that was needed to cut all losses on diesel.

"Much of diesel is used by big cars and SUVs owned by the rich and by factories and businesses. Should government run large fiscal deficits to subsidise them? We reduced taxes on petrol by Rs. 5 per litre to prevent a rise in petrol prices. We did this so that the crores of middle class people who drive scooters and motorcycles are not hit further," said Dr. Singh. "On LPG, we put a cap of 6 subsidised cylinders per year. Almost half of our people, who need our help the most, actually use only 6 cylinders or less. We have ensured they are not affected. Others will still get 6 subsidised cylinders, but they must pay a higher price for more. We did not touch the price of kerosene, which is consumed by the poor," he added. Asserting that no government likes to impose burdens on the common man, Dr. Singh said the UPA Government has been voted to office twice to protect the interests of the 'aam admi'. "At the same time, it is the responsibility of the government to defend the national interest, and protect the long term future of our people. This means that we must ensure that the economy grows rapidly, and that this generates enough productive jobs for the youth of our country," said Dr. Singh.

"Rapid growth is also necessary to raise the revenues we need to finance our programmes in education, health care, housing and rural employment," he added. The Prime Minister also defended the UPA Government's move to allow foreign direct investment in retail, saying it would not hurt the small traders. "Organised, modern retailing is already present in our country and is growing. All our major cities have large retail chains. Our national capital, Delhi , has many new shopping centres. But it has also seen a three-fold increase in small shops in recent years," said Dr. Singh. "In a growing economy, there is enough space for big and small to grow. The fear that small retailers will be wiped out is completely baseless," he added. Asserting that the opening of organised retail to foreign investment will benefit the farmers, Dr. Singh said: "According to the regulations we have introduced, those who bring FDI have to invest 50 percent of their money in building new warehouses, cold-storages, and modern transport systems." "This will help to ensure that a third of our fruits and vegetables, which at present are wasted because of storage and transit losses, actually reach the consumer. Wastage will go down; prices paid to farmers will go up; and prices paid by consumers will go down," he added. The Prime Minister said the growth of organised retail would also create millions of good quality new jobs. Pointing out that the government recognises that some political parties are opposed to this step, Dr. Singh said: " That is why state governments have been allowed to decide whether foreign investment in retail can come into their state. But one state should not stop another state from seeking a better life for its farmers, for its youth and for its consumers."

"In 1991, when we opened India to foreign investment in manufacturing, many were worried. But today, Indian companies are competing effectively both at home and abroad, and they are investing around the world. More importantly, foreign companies are creating jobs for our youth -- in Information Technology, in steel, and in the auto industry. I am sure this will happen in retail trade as well," he added. Asserting that the UPA Government is the government of the 'aam aadmi', Dr. Singh said: "In the past 8 years our economy has grown at a record annual rate of 8.2 per cent. We have ensured that poverty has declined much faster, agriculture has grown faster, and rural consumption per person has also grown faster." "We need to do more, and we will do more. But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficits, which cause a loss of confidence in our economy," he added. The Prime Minister further promised that he would do everything necessary to put the country back on the path of high and inclusive growth. Emphasizing that a lot more needs to be done to protect the national interest, Dr. Singh said: "We have much to do to protect the interests of our nation, and we must do it now. At times, we need to say "No" to the easy option and say "Yes" to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this I need your trust, your understanding, and your cooperation." "As Prime Minister of this great country, I appeal to each one of you to strengthen my hands so that we can take our country forward and build a better and more prosperous future for ourselves and for the generations to come," he added.