Amidst concerns raised by India Inc on high cost of credit affecting their investment plans, the Prime Minister, Dr Manmohan Singh, on Thursday said if the easing of inflation seen in the last few weeks is sustained, the RBI will be able to ease up on monetary tightening as well.
Dr Singh's remarks came at the meeting of the Council on Trade and Industry chaired by him. The meeting was held in the backdrop of the industrial slowdown and controversies surrounding foreign direct investment in multi-brand retail.
Pointing out that the persistent high inflation for some time now is unacceptable, the Prime Minister said, “With the policy focus on improving agricultural production and productivity, our economy will soon be able to step up the production of food articles, thereby controlling inflation in these products.”
On sensitive issues like those related to acquisition of land and environmental concerns, he said, “Industry and the government will have to work together to find solutions that are fair and equitable even as they promote growth.” He said the energy, port and the transport sectors as well as gas and coal supply need greater attention.
Expressing concern over the sharp depreciation in the rupee, he said, “We are watching the situation very closely and will take whatever steps are necessary to prevent wild fluctuations. However, the exchange rate depreciation increases the profitability of exports and our industry should take advantage of this development.”
Meanwhile, sources said the industry has been asked to identify a dozen mega projects that need to be fast-tracked to revive business sentiment.
Though Dr Singh did not directly address FDI in retail, he said, “In a democratic polity like ours and in the era of coalition politics, it often becomes necessary for the government to build a broad consensus on major public policy issues.”