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High fiscal deficit an investment deterrent: Indian PM
Publication Date : 02-11-2012
Indian Prime Minister Manmohan Singh yesterday held the first meeting of his reconstituted Council of Ministers, and told his team that it had to work with “common understanding” on critical issues like fiscal deficit and investment constraints so that infrastructure which held the key to development did not suffer.
Sharing his thoughts with his colleagues on the government’s priorities, the prime minister said the Indian economy had done well but it was now 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,” he said.
Of particular concern, he told the ministers, was the fiscal deficit, which was too high and acting as a deterrent for domestic and foreign investment. These issues, he said, had a ripple effect across the economy and on the work of many departments. But there was no need for being “unduly gloomy about our prospects”, although the need to redouble the resolve to meet the challenges and to rise to the task of governance was obvious, Singh said.
Telling his team about the harsh times ahead, the prime minister said infrastructure was on top of the government’s agenda. The reason why the area needed efforts at multiple levels across the government was that during the 12th Plan, the government had set a target of realising nearly one trillion dollars of investment in infrastructure sectors.
“To do so, we will have to overcome the constraints that currently deter or slow down this investment. Fuel supply arrangements, security and environmental clearances and financing difficulties are among these constraints,” he said.