PM concerned at growing inequities, subsidies; calls for reforms

New Delhi, Dec 15 (UNI) Expressing concern at the growing inter-regional and urban-rural divide, Prime Minister Manmohan Singh today argued for stepping up the saving and investment rates for sustained high economic growth.

The Prime Minister came down heavily on the existing subsidy regime, saying that it neither meets the goal of efficiency nor equity.

These remarks of the Prime Minister came while participating in the golden jubliee celebration of the Institute of Economic Growth (IEG) here.

Dr Singh said, ''if such subsidies do not reach the poor, they do not in fact address the objectives they are meant to. I find we spend far too much money funding subsidies in the name of equity, with neither equity objectives nor efficiency objectives being met.'' The Prime Minister was also of the view that the straight jacket approach of either viewing the market as a panacea of all ills or giving the State this role was not the right approach to follow.

The problems of underdevelopment of India require pragmatic and practical solutions.

The Prime Minister was of the view that reforms continue to be pushed forward to maintain high growth rate on a secular basis.

The remarks of Dr Singh comes ahead of the National Development Council meet slated for December 19, where the main agenda is approval of the 11th Five Year Plan document. The theme of the document is achieving high growth with inclusiveness.

The Prime Minister, however, did not spell out any specific proposal for reducing subsidies. Instead, he posed a question to the gathering of economists and socio-economists at the function: ''Can we find more rational solutions to the problems of imbalances and inequities in growth? I leave this thought with you and I hope institutions like yours will find answers that policy makers can make use of.'' Recalling India's economic development, the Prime Minister said that while the country was ahead of East and South East Asia in the 1950s, it had fallen behind by the 1990s.

''Today we are engaged in a process of catching up. I am convinced that if we stay the course, and if we implement the strategy for the XI Five Year Plan, we will in fact be able to catch up with South East and East Asia.'' Talking about imbalances in the growth process, Dr Singh said the rural-urban divide, and the inter-regional divide are the concern areas. ''Our Government has initiated several policies aimed at bridging the rural-urban divide. The investment we are making in rural infrastructure, rural education and healthcare and in promoting non-farm employment in rural areas should help. However, the task is Himalayan and there is much that state governments will have to do in this regard.'' Inter-regional imbalances in development have both economic and political causes and consequences, Dr Singh said, adding that there seems to be a historic continuity in the pattern of regional development in India.

''Parts of north-western India, western India, and southern India are marching ahead of central India, eastern India and north-eastern India. We cannot allow these regional imbalances to persist.'' He stressed on the need for massive investment in social and economic infrastructure and the need for policies to make public investment more productive and encourage private investment.

Any long-term strategy for addressing both challenges must focus on agricultural development and agrarian change, on the development of human resources and on promoting labour intensive industrialisation in these regions, he added.

He also said the country has to move from a situation where people migrate to where jobs exist, to a situation where jobs migrate to where people live.

''This means taking development - in particular industrial development - to backward regions. This means increasing avenues for non-farm employment in rural areas. This means investing in better social and economic infrastructure in backward areas,'' Dr Singh said.

Many of the researchers from the IEG as well as Delhi University, who at one time have worked with Dr Singh were present on the ocassion.

The Prime Minister in his earlier part of life had been a teacher at the prestigious Delhi School of Economics. He also had the ocassion to work with top economists and researchers from other social sciences at the IEG.

UNI