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$150 B needed to fix India: PM
By agencies
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Thursday, 25 August 2005, 19:30 IST
NEW YORK: Faced with stiff opposition from Left allies on the issues of labor reforms and disinvestment, Prime Minister Manmohan Singh has said "extreme rigidities" of the labor market have affected the country's economic growth potential but limitations of the coalition government prevented him from carrying out reforms in a "big way."
"Extreme rigidities in the labor market, inflexibility of the labor market, is not consistent in our achieving our goals in a world where demand conditions are changing so fast, technological conditions are changing so fast," he told McKinsey Quarterly, a publication of the leading global management Consultancy McKinsey and Co., in an interview.
Asked about the constraint his government faces due to its coalition nature, he conceded that there are limitation "for the time being" and "we don't have the broad based consensus in our coalition for me to assert that I cam move forward in a big way" for reform in the labor market.
"But I do recognize that we should take credible action," he added.
Pointing out that the communist government in West Bengal appreciates the need for labor market flexibility and is moving in the areas of privatization also, the Prime Minister said the Left parties have to be convinced that what is good for West Bengal is also good for the country. "I haven't given up hope. I have full confidence in the patriotism of our Left colleagues to believe that in the final analysis of what is good for India, they will also be on board," he added.
"We may be slow moving but if we build a consensus that would be far more durable than any other mechanism that I know of," the Prime Minister said.
He expressed confidence that when all things are considered "the reforms will have more broad based support" and remarked "a politician before he can become statesman has to remain in office for long enough."
The Prime Minister said he plans to identify areas where India needs a big thrust forward and set up a mechanism to bring about "convergence" in what the state governments do and what the Center does so as to maintain a sustained and fast pace of development.
Identifying steel as one of the major sectors, he said the mechanism he is considering would comprise a group of "dedicated officers" to work together to ensure that the country's three-tier system of government does not become a bottleneck in the development effort.
The Prime Minister, who fielded questions on a wide range of issues from poverty eradication to foreign investment, said his "first and foremost priority" is to get rid of chronic poverty, ignorance and disease which have afflicted millions and millions of the people and thus "finish the unfinished task" set out by the founding fathers at the time of Independence.
Singh agreed that India has a lot of backlog in improving infrastructure and said his estimates is that the country would need about $150 billion in next seven to eight years to realize ambition of infrastructure which is equal to the social and economic challenges that the country faces.