We MUST correct our own weaknesses: PM

Prime Minister Manmohan Singh on Saturday said the government has dispelled the atmosphere of 'gloom and doom' and will soon announce steps to stave off investors' fears ensuing from taxations measures like anti-tax avoidance rule and retrospective tax amendments.

"We have dispelled gloom and doom, improved the climate for foreign investment, improved ministry coordination, and are working hard to restore investor confidence and the growth environment," he told captains of India Inc at the Economic Times Award function in Mumbai.

Admitting that certain tax measures like GAAR (general anti avoidance rules) and retrospective tax amendments in the budget have led to "a very negative" reaction from investors, he said, "We hope to announce decisions on all these issues within the next few weeks."

Pointing out that the Cabinet has approved changes in banking and insurance laws and also a new pension law, with higher FDI limits, the prime minister said, "It will be our endeavour to have them passed by Parliament as soon as possible. They will make our financial system more able to support growth."

About the growth prospects for the current financial year, Dr Singh said Indian economy has been affected by the global slowdown and this has dampened the investors' sentiment.

"Growth decelerated to 6.5 per cent last year and may be only around 6 per cent in the current year. This has dampened investor sentiment. Doubts are being raised in some quarters about the India growth story going astray," he admitted

"But we can, and we must, correct our own weaknesses, and create new opportunities for economic growth and employment at home. This is the challenge before us," he added.

Referring to the recent government decisions to raise the price of petroleum products and capping supply of subsidised cooking gas cylinders, Dr Singh said the government is conscious of their effect on poor people.

"We will take all possible measures to protect their lifeline needs," he said.

Referring to the recent reform measures announced by the government, the prime minister said some of those were considered by many critics as politically impossible.

"We bit the bullet and did what we felt was the right thing to do. Undoubtedly, more needs to be done," Dr Singh said.

He further said one of the major negative features of the present situation is that a large number of infrastructure projects are stuck because of the delay in granting various
clearances and the non-transparency in determining the conditions under which clearances can be given.

"We are looking at ways to speed up clearance processes and making them more transparent," he said.

Ramping up of investment in infrastructure, Dr Singh said, is critical for reviving the growth momentum.

The 12th Plan (2012-17) envisages an investment of about USD 1 trillion, and the government expects half of it to come from the private sector.

"Investment in infrastructure has to be in the vanguard of public investment for many years to come and we are working in that direction. We have set ambitious targets for the
infrastructure sector and ministries are being monitored regularly to see that they perform as expected," Dr Singh said.

He also told India Inc that government is ramping up coal production and promoting pooling of imported coal to deal with the fuel supply problem of the power sector.

Talking about the recent liberalisation of FDI policy in retail, aviation, insurance, power exchanges and broadcasting, Dr Singh said that "some people still try to make FDI into a
bogey, even invoking fears of the East India Company".

In democratic politics, he said, any action of the government should be open for scrutiny and criticism.

"But our experience should teach us not to be fooled by naysayers and Cassandras of doom. Indian industry has responded to the opening of the economy in ways which were not easily foreseen," Dr Singh said.