Prime Minister of India - Dr. Manmohan Singh

PM's Comments on the Union Budget 2004 - 2005

In an interview to Doordarshan, the Prime Minister commented on the Budget 2004-05.�

Following is the full text of the interview .

"Q. Sir, What are your first comments on the budget in the backdrop of your renewed emphasis on growth with equity. It's for the first time somebody has talked about it?

P.M. This is a budget, which seeks to translate the vision of combining rapid economic growth with faster progress on the road to social equity. Meaningful solutions to the problems of mass poverty, ignorance and disease, which still afflict millions of our people, can best be found in the framework of a rapidly expanding economy, particularly fast expansion of our agricultural economy and rapid acceleration of the rate of industrial growth. For that it needs high doses of investment both in agriculture and industry and in social and physical infrastructure - this Budget seeks to do precisely these things.

Q. Sir, you seem to have achieved the impossible - there was criticism that you won't be able to spend so much, where will the money come from. But after announcing so many schemes you still have a revenue deficit, which is 2.5 per cent of the GDP, which is quite positive. Your comments on that...

P.M. Well, I have always believed that fiscal rectitude is very essential for orderly growth of the economy and also for ensuring greater social equity. Because the poor often suffer the most when reckless inflation takes over. I am very happy that this Budget brings about fiscal consolidation in the sense that the revenue deficit has been reduced by a full one percentage point. The fiscal deficit is at a reasonable level of 4.4 per cent. It is our intention to wipe out the revenue deficit over the period of next five years.

Q. So, fiscal deficit continues to be a 'dharma' for this government.

P.M. A sound fiscal and financial system, I think are the key requisites for carrying forward the process of rapid economic growth as well as social justice.

Q. Does this also mean that you are keeping your commitment to prioritise expenditure rather than simply increasing expenditure mindlessly?

Ans. We have increased plan expenditure over the interim budget by Rs. 10, 000 crore. And these extra Rs. 10, 000 crore will be utilised to carry out the objectives of the Common Minimum Programme. We will invest more in agriculture, we will invest more in education, and health and, for example, in agriculture, the watershed development programme which requires over a period of seven years to ensure that all water bodies in our country are renovated, modernised and are made functional - it is a very ambitious task. In the same way, in social services we take very seriously the commitment to universalise access to elementary education, providing cooked mid-day meals programme, expanding the scope of existing schemes for provision of drinking water and on the employment front, the Employment Guarantee Act is still in the process of being formulated. But in the meantime we are going to launch a massive food-for-work programme in 150 most backward districts of our country.

Q. Sir, there is also a focus on defence modernisation - a lot of funds have been allocated. Would you throw some light on that?

P.M. Well, I think that defence expenditure has been rather neglected in the last 3-4 years. We are committed to making good that deficiency. This is an investment in national security, I think, which we must honour.

Q. Sir, you have spoken about retargetting subsidies. Now, in what way are you going to convince achieve this or in which way are you going to convince your Cabinet colleagues on retargetting subsidies to the really needy and poor.

Ans. Well, the Finance Minister has promised a study by the National Institute of Public Finance and Policies and when that study is ready, we will discuss all these matters in Parliament and various affected interests.

Q. Coming to your New Deal for agriculture which is a big change from previous government's policies. How will the New Deal work out besides enhancing investments in agriculture and giving the farm sector a whole lot of enabling framework. How will you address distortions in the product markets and the price signals in agriculture, Sir?

Ans. We can't solve all problems but there are, I think, major problems. The agricultural credit scheme suffers from major deficiencies. We are committed to increasing the flow of agricultural credit by 30 per cent this year and double it in the next three years. There are problems with regard to cooperative banking system. Well, we will appoint a Task Force to bring out what is wrong with the Cooperative Banking system and during the course of time devise proper remedial measures. We have already introduced a well thought out package for dealing with the problems of rural indebtedness. In addition, we want to expand the scope of both private investment and public investment in agriculture. The tax concessions, which have been offered in this Budget, focus very sharply on agro processing and on diversification of our agricultural economy.

Q. What are the signals of growth in this Budget?

P.M. As I said, the first thing is that we are creating an enabling environment for growth of investment - both public and private. I mentioned something about agriculture and the National Water Management Programme. I have also mentioned, we are going to launch a National Horticultural Mission. Then in the field of industry there are a whole range of proposals - we are setting up an Investment Commission as a promotional body, there are tax concessions for various industries - for example, the automobile R&D sector, for the shipping industry. As far as the textiles are concerned, we have a tax regime, which will free lakhs and lakhs of handloom weavers and powerlooms from the clutches of Excise Inspectors.

Q. Sir, you have recently spoken about reinventing the State in a qualitative manner to deliver quality services. Do you have any framework in mind?

P.M. It is not a one-shot operation. We want a Government that works, and works for the benefit of our people. Therefore, whether it is a delivery of justice system, whether it is the law enforcement machinery, whether it is the development administration - all these matters require a fresh look to make our administration more efficient, more accountable to the people.

Q. Would you look at some new kind of Administrative Reforms Commission?

P.M. We are committed to setting up an Administrative Reforms Commission.

Q. Because delivery seems to be the focus now in terms of how the State delivers.

P.M. That's very true. I think we have to improve the delivery systems all along the line.

Q. Sir, for the first time you have enthused other agencies like NGOs to participate in this development process. After your visit to Andhra, they seemed to be very enthusiastic - it was very visible. How do you translate this into activity?

P.M. India is a country of great diversity and great complexity. There is no single solution, which is applicable to all parts of the country of our size and our complexity. We must experiment with viable options and these must vary from State to State, from place to place, from region to region and we must therefore learn from facts. The NGOs are a very effective mechanism to encourage that process of education, of the government as to what works on the ground and what does not work. So we will work very closely with all the institutions of the civil society, particularly the NGOs who are active in social development and in associated areas dealing with the problems of our people like watershed development, resource management in rural India, education, social services - in all these matters we want to enlist the cooperation of all actors who are acting in various phases."

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