NEW DELHI: The Government's decision to cut fuel prices on Thursday, coupled with measures to tighten money supply, should have "positive results" on bringing down inflation, Prime Minister Manmohan Singh said on Thursday.

Speaking at Hyderabad House in the presence of Italian Prime Minister Romano Prodi, the Prime Minister pointed out that the prices of diesel and petrol were reduced only on Thursday afternoon. "I hope to see positive results of the steps taken," he told presspersons.

On National Security Adviser M.K. Narayanan's comments about the alleged use of the stock markets by terrorist groups, the Prime Minister quipped: "I don't want to create any turbulence in the stock market." However, Dr. Singh stressed that the measures required to deal with this problem were being taken.

Asked by an Italian journalist about the problems in acquiring land under the special economic zone (SEZ) scheme, Dr. Singh replied that India was a well-functioning market economy growing at a rate of eight to nine per cent annually.

It was his Government's objective to raise the growth momentum to 10 per cent in the next four-five years, the Prime Minister stated. As the economy grew, the Prime Minister stated, the country would open up to further foreign investment.

Transitional problems

If the Government was able to create the growth momentum to generate more employment, that would create "elbow room" to liberalise the economy further. "We want more competition," he said, pointing out that Indian business had been able to compete both at home and abroad.

On the problems of land acquisition in the SEZ programme, the Prime Minister said in a country with settled cultivation for the past 5,000 years, the transfer of fertile land from agriculture to industry did create some transitional problems.

"We can solve this problem if we maintain the growth momentum," he felt. Dr. Singh stated that it would be politically and economically easier for the Government to "handle this transition" if more jobs were created.

Asked about Italy's position on India's hopes to enter the United Nations' Security Council, Mr. Romano Prodi conceded that this was one issue in which there was a difference with India.

However, the two countries shared the same goal: to adapt the Security Council to the needs of a changing world. Italy, which has been opposed to any expansion of the Council in the permanent category, would continue talks with India on this issue, Mr. Prodi promised.

Earlier, three agreements — on the creation of a joint working group on combating terrorism, a cultural exchange programme for 2007-09 and an accord on cooperation in the field of renewable energy — were signed in the presence of the two Prime Ministers.

A joint statement issued after the talks had both leaders stressing the importance of achieving energy security. "Italy recognised the rising demand for energy in India and the need for international cooperation in this domain. They agreed to discuss the need to adopt forward-looking approaches to enhance civil nuclear cooperation under appropriate IAEA [International Atomic Energy Agency] safeguards with India," it said.

Defence cooperation

Stating that the defence sector presented opportunities for increased cooperation between the two countries, the statement added, "Both sides expressed deep satisfaction with the outcome of the [Prodi] visit... [which] represented the beginning of a new phase in the growing partnership between India and Italy."

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