After losing elections, PM says inflation worries 'legitimate'

With price rise being attributed as one of the prime reasons for the Congress poll debacle, Prime Minister Manmohan Singh said the "worry about inflation is legitimate" but noted that incomes of most people have increased faster than inflation.

At a time when the issue of corruption is also seen going against the UPA, Singh said, "We have not eliminated corruption. But the fact is that we have done more than any earlier government for bringing in transparency and accountability in the work of public authorities."

While acknowledging that "inflation is an area of weakness" for which the government is criticised, the Prime Minister said, "It is true that the rate of inflation has increased but this is primarily because food inflation has increased.

"As consumers we would naturally want food prices to be low but we must remember that those who produce food - whether it is foodgrains or vegetables, fruits, eggs, milk etc. gain from higher prices," he said addressing the Congress Parliamentary Party meeting.

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The Prime Minister also made a veiled attack on the Opposition, saying "simplistic solutions will not provide workable solutions".

He said that it was important to reflect on why the government gets less credit for its achievements "than perhaps they deserve".

"The answer is that rapid economic growth, social change and political empowerment of the last decade have given rise to new aspirations especially among the youth. The electronic media is quick to project visual evidence of the progress in many parts of the country especially in Urban India,” Singh said.

He further added: "The same media makes us more aware of the extent of deprivation, which still affects many families. Insecurity for women and corruption at different levels are other areas of focus. In this environment, it is not surprising that governments are under pressure to deliver more and perform better. Political parties in Opposition can exploit this to their advantage.”

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On the issue of corruption, he said the public debate on the issue has been dominated by problems associated with the allocation of natural resources such as spectrum, coal and land.

"The central government is concerned only with spectrum and coal. Both have generated controversies but it is important to realise that the controversy relates to the operation of a system of allocation, which we did not invent. We only continued with the system we inherited.

"There have been allegations of wrong doing in the allocation process of both spectrum and coal. We have initiated action under the law. Ministers and senior civil servants have been indicted," he said without elaborating.

The Prime Minister said what is more important and is "not being projected sufficiently" is that the government has actually changed the system.

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"Both spectrum and coal are now being allocated through auctions. There can be no scams in the areas in future. I believe we can genuinely claim credit for making the system change, which no other government did. Critics will say that we should have done it earlier. Perhaps, in retrospect we should have but in our system change does take time," he said.

Speaking on the issue of price rise, Singh said while real per capita consumption and real wages have increased, to some extent the government's inclusive policies have put more money in the hands of the weaker sections and they naturally spend more on food.

"To keep prices in control, we need to increase supplies and also improve marketing arrangements and logistics since most food items are perishable," he said putting the onus on the states in this regard.

"The states have a big role in this effort and we need to engage them more actively. There is at times a suspicion that high prices do not benefit farmers but only the middlemen, who create artificial shortages. This can only be controlled by the states under the Essential Commodities Act since all power vests with the state," Singh said.

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The Prime Minister said that government's past record establishes its credibility for future action. "We must build on our past successes and strengthen areas, where performance has been weak," he said.

Singh, a noted economist, said Congress must project a vision of rapid economic transformation in a socially inclusive manner.

We should offer the prospect of rapid and truly inclusive growth for the next twenty years. We have done it for the past ten years. We can do it for the next twenty," he said.

The Prime Minister said, "The fact is that India is in a critical stage of transformation. There are tensions in our neighbourhood and tensions in our polity. There are tensions in our economy as there are in any emerging market economy coping with complex global changes".