UPA-II Celebrates 3 Years in Office: Sonia Says UPA Can Win in 2014

"Tough decisions on spending"

 With government gearing up to announce austerity measures to deal with the fiscal situation, Prime Minister Manmohan Singh said the Centre will take difficult decisions on spending and revenue mobilisation.

 "Difficult decisions have to be taken on both spending and revenue mobilisation", he said.

 His statement comes in the backdrop of announcement made by finance minister Pranab Mukherjee recently in the Rajya Sabha that government would roll out austerity measures.

 When asked by reporters about details of tough measures being contemplated by the government, Singh said, "let us wait. Sometimes, something will be obvious".

 The Prime Minister during his address specifically flagged the issue of worsening balance of payment and fiscal situation.

 "I recognize that we face pressures on our balance of payments and that the fiscal situation needs careful management. Determined measures are needed to boost the climate for industrial investment, both domestic and foreign", he added.

 While the current account deficit (CAD), which indicates the difference between inflow and outflow of foreign exchange, is expected to rise to 4 per cent of the GDP in 2011-12 from 3.3 per cent a year ago, the high crude oil prices will put pressure on government finances.

 More importantly, steep fall in value of rupee, which crossed Rs 55 to a dollar, will push up the cost of imports, especially the petroleum products and imported fertiliser. The oil marketing companies (OMCs) have been clamoring for increase in retail prices of petroleum products.

 When asked about declining value of rupee, Singh quipped, "in a market economy, currency goes up and down".

 The Prime Minister further said that despite an adverse international environment, the Indian economy grew by about 7 per cent in 2011-12, which is amongst the highest in the world.

 On the opposition charge that decision making in the government is stuck on account of policy paralysis, he said, "this (perception) can be corrected by reality. Misconceived perceptions can be corrected."