Friday, June 6, 2008

Indian PM says inflation is immediate challenge

by Jo Black

Addressing the Inaugural Session of CII’s National Conference, the Prime Minister Dr. Manmohan Singh said that the immediate challenge facing India is the increase in global commodity prices, especially the price of food and petroleum products, over which it does not have much control.

Otherwise, he was confident that the long term and medium term picture for India remains highly encouraging and the prospect for domestic growth remain good.

He said that the world community has not done enough to address the challenge of rising prices, as the diversion of land from food crops to bio fuel has contributed to the rise in food prices.

The challenge of food security and the problem of rising oil prices need to be addressed together.

He expressed his concern that the global response to the current energy crisis has been far from adequate and compares poorly with the response during previous crises in the energy sector.

He asked industry to co-operate with government to ensure long-term stability of the growth process.

He said that industry leaders, particularly in sectors where significant market power lies in the hands of a few producers, have a social obligation to assist the government in moderating inflationary expectations.

He made clear his expectation that industry should absorb the rise in input costs, to the greatest extent possible, by laying emphasis on improved productivity.

The Prime Minister then expressed his concern about the instability in the global financial system caused by the sub-prime crisis and the recession in the United States.

Greater consultation is required to address the structural weaknesses that continue to plague the functioning of the financial system in developed markets.

He said that India’s voice should be heard globally in matters ranging from the management of the world food economy and the energy economy to issues such as climate change and the global financial system.

He said that he expected Indian industry to be at the forefront of efforts to promote the use of environment friendly and energy efficient technologies and processes.

The Prime Minister appreciated the role played by CII in addressing the skill shortage being faced by India today.

He recognized that improving the skill base of the people is the first step in building the nation.

The government, on its part, has increased several fold the funding for primary, secondary and tertiary education.

He urged active participation from State governments, local governments, civil society and the private sector to translate these higher outlays into better outcomes.

 

 

 

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