The Hindu Business Line : We will soon gain mastery over inflation: Manmohan

"I cannot authoritatively pronounce the right mix of fiscal and monetary policy. Monetary policy is the preserve of the Reserve Bank of India. Both the RBI and the Finance Ministry are alert to the problem."

SITUATION UNDER CONTROL: The Prime Minister, Dr Manmohan Singh, addressing a press conference in the Capital on Saturday. - Kamal Narang

New Delhi , Sept. 4

A DAY after the release of official data showing inflation at a three-and-a-half-year high of 8.17 per cent for the week ended August 21, the Prime Minister, Dr Manmohan Singh, admitted that the price situation was "a matter of concern."

Addressing an official press conference here on Saturday — billed as the first-ever held by an Indian Prime Minister in over a decade — Dr Singh attributed the rising inflation levels to a combination of a steep jump in global oil prices, concerns arising from the late arrival of the monsoon and "avoidable disruptions," such as the truckers' strike. Adding to all this was "the overhang of excess liquidity of the last two years, which had to one day find expression."

The Prime Minister was, however, emphatic that the situation was not getting out of hand, and "we will soon gain mastery over inflationary expectations."

Unlike in past inflationary episodes, the country has adequate stocks of foodgrains and foreign exchange reserves to take care of inflation this time round. While "firm measures" would be taken to check inflation, he made it clear that these would, at the same time, not end up hurting the growth process.

To a specific query on whether the Government would resort to a "tight-money" policy to counter the overhang of excess liquidity — similar to the anti-inflationary strategy pursued in 1995-96 (when Dr Singh was the Finance Minister) — the Prime Minister said no two situations are the same. "I cannot authoritatively pronounce the right mix of fiscal and monetary policy. Monetary policy is the preserve of the Reserve Bank of India. Both the RBI and the Finance Ministry are alert to the problem," he added.

While identifying inflation as a core concern, Dr Singh was, however, categorical that neither economic growth nor the economic reforms process had faltered during the 100-day-odd tenure of the United Progressive Alliance Government. "There is no evidence to believe that there is deceleration in growth. Industrial growth so far has been higher, investment is buoyant, non-food credit growth is higher and export growth is also better than the same period last year," he pointed out. All this despite extremities of drought and floods in different parts of the country, caused by the weather god "on which we have no control," he said.

On reforms, Dr Singh said he did not view the ruling coalition's dependence on the Left parties as a stumbling block. "You should judge politicians not by what they say when they are in the opposition but what they do when they are in power," he quipped, while mentioning the experience of his own party offering free power to farmers in Punjab in its election manifesto. The same party that came to power "recognised that it (free power) is simply not sustainable."

Dr Singh was also hopeful that he would be able to persuade the Left to agree to the Budget proposals on increasing foreign direct investment limits in the telecom, insurance and civil aviation sectors. "We are engaged in a very constructive dialogue with the Left and I am confident that we will be able to go ahead with these proposals," he said.

As regards disinvestment of public sector undertakings (PSUs), the Prime Minister said there was no "earth-shattering need" to privatise those companies that can continue to make profits in a competitive environment. While disinvestment in these PSUs was welcome to help them raise resources from the market, "it should not be to the extent of changing their public sector character."

Apart from economic issues, Dr Singh answered questions on a host of subjects, ranging from foreign policy, defence, internal security, politics and his own position vis-à-vis the Congress President, Ms Sonia Gandhi. At the end of the one-and-a-half-hour-long press conference, the Prime Minister sought to convey an unambiguous message: His Government was here to stay for its entire five-year term.