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Insulating economy our priority: Manmohan

Harish Khare

Capital inflows may be affected; foreign investors may need liquidity and take out money

— Photo: PTI/ Manvender Vashist

Prime Minister Manmohan Singh addresses the press on board special aircraft.

ON BOARD SPECIAL AIRCRAFT: Prime Minister Manmohan Singh has said his government’s foremost priority is to insulate the Indian economy “to the maximum possible” extent from the global financial meltdown.

Interacting with the media on Tuesday-Wednesday night, on the way back home from Paris, Dr. Singh argued that India was not all that susceptible to the upheavals in the western markets.

“We are not immune from what happens in the outside world. But we are not vulnerable to the extent that some other countries are vulnerable,” was his formulation.

At the same time, the Prime Minister did concede that the global crisis could lead to a decline in capital inflows because foreign investors may “need liquidity, [and] take money out.” In such a situation, the stock markets would be affected and the Indian corporate houses would have difficulty raising resources abroad.

“And if there is a recession in the developed world, particularly the United States, it could hurt our exports. We have to work out a coherent strategy to protect our interests, and we are confident we will be able to do so,” he said. He also suggested that the international financial crisis would also help moderate inflation at home.

Despite all this the Prime Minister was confident that the economy would be able to grow at 7.5-8 per cent – even if a decline from the current rate of 9 per cent – and that would still make India “the second fastest growing economy in the world.”

Asked if the current global financial disorder is an occasion to revise the faith in the markets, he argued that “we have no ideological positions. We have been cautious reformers, [carrying out] reforms with a human face. We do not have a strong ideological commitment to the markets; markets are useful servants but markets also need regulations, purposeful regulations.”

The Prime Minister pointed out that “we still don’t have a full blown capital convertibility, so whatever we have done has been done with the long term interest of the country in mind, and at the same time we have sought to ensure that the risks in the process of opening up are controlled.”

He brushed off a question on when the country could expect a new Home Minister, in the wake of criticism against Shivraj Patil after fresh terror blasts. He said, “you don’t expect me to discuss the issue of Cabinet formation in a press conference.”

He had earlier said there was need to “strengthen our intelligence gathering machinery, to streamline our investigation process, and also our prosecution processes.”

Pressed if he was willing to exercise his prerogative of selecting/reshuffling his Cabinet colleagues, he said, “I have to take into account the totality of interests, totality of concerns and whatever will be done will be done in the interest of our country.”

Asked whether he agreed with the interpretation that he stood transformed after the July 22 trust vote, he said he was now the captain of the team. But, he entered the caveat, that it was a coalition team and that such a team was not without its constraints.

‘A purposeful government’

“The charge against the Congress is that the Congress is not good at managing coalitions. I wanted to prove that statement wrong and I think we have nearly succeeded. We have given this country a purposeful government, a government which by-and-large has the support and respect of all the constituents of our coalition,” he explained.

He regretted the parting of ways with “our Left colleagues” on the nuclear deal issue but said that “ I sincerely believe that whether it is the BJP or the Left, if they look objectively there is nothing in the nuclear deal which will hurt the interests of the country.”

Asked if he would be the Congress prime ministerial candidate in the next Lok Sabha poll, Dr. Singh said: “It is too early to talk in terms of a potential Prime Ministerial candidate. The Congress party has several leaders who are equally or better qualified than I am. I have not applied my mind to that sort of question.”

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