Prime minister Manmohan Singh defended his government and said that corruption was not rampant. In an interview to Hindustan Times, a newspaper, the prime minister said that the government was working on a set of measures to rein in the fiscal deficit.
Singh also said that the government was looking to improve the response time for business approvals.
The Indian government spends more than it earns in taxes and runs a fiscal deficit. As a result, it has to borrow from the Reserve Bank of India. This leads to inflation and limits RBI's ability to stimulate growth by cutting interest rates.
“Controlling fiscal deficit is at the top of government agenda,” he said in the interview. He called for a consensus within the government.
“Investors should feel that we mean business,” he added.
He also said that the India growth story was intact and that his government would continue to work to keep the story going.
It has been a struggle for India as it witnesses a slowdown from an over 8 per cent to 9 per cent growth two years ago to close to 6 per cent now.
Last Thursday, planning commission deputy chairman Montek Singh Ahluwalia said that achieving an annual growth rate of 9 per cent in the 12th Plan was not feasible in the difficult global environment, and even 8-8.5 per cent is an "ambitious" goal that will require massive reforms.
The Reserve Bank of India on Thursday said in its Financial Stability Report that the government has to reduce the fiscal deficit to stimulate growth. India spends more than it earns in revenue. It also imports more goods and services than export. This results in a fiscal as well as current account deficit.
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