PM: Scams won't impede economic reforms

Hints at measures to develop a corporate debt market and set up an infrastructure fund in Budget 2011-12.

Conceding corruption had taken the sheen off the performance of the United Progressive Alliance (UPA) government, Prime Minister Manmohan Singh on Wednesday promised governance and economic reform would not be impeded by scams.

Addressing a group of editors from television channels, the PM hinted at two announcements that could be expected in Budget 2011-12. The first is a move to develop a corporate debt market to help companies mobilise funds. “We must, I think, create a viable corporate debt market. I think that is the direction in which we must move,” Singh said.

Talks are also underway to set up an infrastructure development fund. "Some discussions are going on... and most probably, I think, the finance minister will outline something in that direction," the PM added.

Measures that will bring inflation down to 7 per cent by the end of the financial year through reform of marketing systems and internal trade are part of the ‘essay in persuasion’ that the Centre is engaged in with state governments, he said.

The PM said his biggest achievement had been keeping India’s growth story at a steady 8-9 per cent, despite a hostile international economic environment. While there was an impression that India is a scam-driven country, Singh said: “I am not a lame-duck Prime Minister”.

Although his style was characteristically low key and self deprecating, the PM mounted a vigorous defence of himself and his government. He admitted inflation, especially food inflation, had been a problem and “we could have controlled inflation through monetary means”.

But doing so would have hurt growth, something no government could have afforded in the current international economic condition, Singh said. The PM repeated what he had said at the end of last year in his address to the nation: “Whatever our domestic weaknesses, we should not lose our self-confidence.”

On the delayed rollout of the goods & services tax, the PM hinted that Gujarat Home Minister Amit Shah’s jail term might have had something to do with the volte-face by the BJP.

The PM met head on the charge that he had been unable to check corruption. On the 2G spectrum scam, he said then communications minister A Raja had assured him “absolute” transparency and had not recommended auctioning 2G spectrum.

“Raja told me he would be absolutely transparent. (Telecom regulator) Trai had not suggested auctioning. Raja, too, said that auctioning will not mean a level playing field for existing players,” the PM said.

He also steered clear of the controversy, saying that “who gets spectrum... on first-come-first-served basis… all these were exclusively decided by the telecom minister”. He said Raja told him 3G could be auctioned, but 2G needed different treatment.

The PM said the finance ministry had concurred with this view. On the charge that telecom companies having got licences had then sold these for a huge profit, the PM said the rollout of their networks might have needed capital and they may have sold equity as a way to raise this capital.

The PM said the comptroller & auditor general’s assessment of Rs 1.76 lakh crore as the loss to the exchequer due to the 2G spectrum scam was notional and that there is no fool-proof measure to estimate such losses. He argued that theoretically food, kerosene and fertiliser were also a loss to the exchequer because they were subsidised.

On the fact that complaints about 2G licences had started coming in by 2009 and despite that Raja was reappointed communications minister, the PM said: “I cannot divulge how the Cabinet was formed. But we have to go by what the leader of every constituent of a coalition suggests. If complaints were coming in, they were from all sides. So, I did not think there was anything seriously wrong”.

Singh said the controversial deal between Antrix, domestic space agency Isro's commercial arm, and Devas for S-band spectrum allocation had never been operationalised and that the Cabinet committee on security would soon decide on terminating it.

He rejected suggestions that his office had held "backroom" talks with Devas after the space commission's decision to scrap the deal and said any delay in implementing it was "procedural". Singh said officials of the department of space, Isro and Antrix did meet Devas representatives after July last year, since the "agreement had not actually been annulled".

"But no further actions were taken by the department of space or Isro to implement the agreement," Singh said, adding: "There have been no backroom talks... There has been no effort in the PMO to dilute in any way the decision taken by the space commission in July 2010. On that, I would like to assure you and the country," Singh said.

This is the first time Singh has spoken extensively about his position in the party and government after various scams came into light in UPA-II. While he did not directly address the question of whether his government would agree to form a joint parliamentary committee as a condition demanded by the Opposition for the smooth functioning of Parliament in the Budget session that starts on February 21, he also categorically denied he was the stumbling block in forming a JPC.

“I am not as guilty as being portrayed,” said the PM with a small smile. Singh said he was ready to appear before any committee, anywhere.

The PM also ruled out an early exit and said his government is “dead serious in bringing to book any wrongdoers, regardless of their position”. “I’ve never thought of quitting. We have a lot of unfinished business and I’ll stay the course,” Singh emphasised.

At least three times during his hour-long interaction, the PM lamented on “compromises”, which are unavoidable in running a coalition. He also admitted there were many things that didn’t go with his outlook. “Things are not entirely the way I’d like them to be,” Singh said at one point.