In a signal that pro-reform policies are back on the agenda, Prime Minister Manmohan Singh said on Saturday: "We cannot expect outside help on a scale that can see us through our difficulties."
Prime Minister Manmohan Singh addressing a press conference on board his special aircraft to New Delhi on Saturday after South Africa visit. PTI Photo
On his return from the G-20 and Rio summits, Singh said India needed effective steps to handle,
among other things, the fiscal deficit - when total expenditure exceeds revenue - the balance of payments deficit - when payments made by the country exceed payments received - and the decline of the rupee against the dollar.
Asked about the possibility of a cabinet reshuffle following finance minister Pranab Mukherjee's exit on June 26 as he is contesting the presidential poll, Singh said it was "a legitimate expectation... You will get to know about it when it takes place".
Singh urged all political parties to work with the government to restore the momentum of growth, but did not elaborate on the specific policies he had in mind. He said it would "not be proper" to go into details before he returned to India.
Among the reformist steps in limbo at present are lifting barriers to foreign direct investment in multi-brand retail and reforming insurance, pension, banking and land acquisition.
When asked about restoring foreign investors' confidence given the country's sliding credit rating and the confusion caused by retroactive taxes, he spoke of the need for both foreign direct and portfolio investment.
Singh noted that capital was "in search of safety" and was going to countries like Germany and the US. Developing countries like China and India were, therefore, seeing their growth rates slump.
He said, "The events of the last couple of days convince me more than ever before that there are no international solutions to the problems of a country of India's size and diversity."
Singh, however, did not explain what assistance he had expected from other nations, though some officials said this was more about the creation of a more stable global economic environment.
Singh insisted there was no "stagflation" in India.
It was merely a "slowdown". Stagflation is an economic phenomenon of simultaneous high inflation and low growth.
He also said, "I still have not given up hope that the Trinamool Congress will also find its way to support the candidature of Pranab Mukherjee."