Welfare and growth complementary: Rahul Gandhi (Roundup)

Congress vice president Rahul Gandhi Saturday plunged into the debate on growth vs welfare, saying that both must go hand in hand since it is "investments in people that create tomorrow's markets.

He also defended strongly the large amounts of money that was being spent on various welfare programmes and said it was necessary for social growth.

"There is a view that our investments in food security, employment guarantee and rural development are a drag on economic growth. I don't believe there is a trade off between investments in the social sector and economic growth," Gandhi told corporate leaders while delivering the valedictory address at FICCI's annual general meeting.

"It is today's investments in people that create tomorrow's markets. It is today's markets that allow us to invest in our people's future," he said, alluding to the ideological debate between the growth-first school and the social welfare-first school.

"I would like to state clearly that poverty cannot be fought without growth. Maintaining robust growth has enabled the United Progressive Alliance (UPA) government to invest in people. In 10 years almost a third of India's poor have risen above the poverty line."

It was a more self-assured Gandhi who faced business leaders today, a far cry from the waffling and rambling address to the one he addressed at the CII conclave in April.

He also came in clean-shaven, with a fresh haircut, and seemed to have done his homework for this important appearance where industry leaders wanted to know the ruling party's views and vision ahead of next year's general election.

Stating that "arbitrary power" was the main problem for India, he said "middle path" can address a host of issues such as environment-industry balance, while calling for strong labor laws and regulation to sustain growth.

Speaking his mind on two major issues that have come to haunt Indian industry -- law for land acquisition and environment clearance -- Gandhi told members of the leading industry chamber that both can be addressed while promoting sustainable development.

He also made it clear that in his view there was no question of a "trade-off" in providing money for social sector, even as he called for the political will for modern labour laws that are flexible and humane.

"Many of you have expressed frustration with environmental clearances that are delaying projects unduly. There's excessive administrative and judicial discretion. The loopholes are so big you can drive a truck through some of them," he said.

"Environmental, social damage must be avoided, but decisions must also be transparent, timely and fair," the 43-year-old politician, who could well be the Congress party's prime ministerial candidate for the general election, said, adding eventually that there was a solution for that.

"Areas that are absolutely critical, we need to be very careful. But in others, we can carve out a way. There is a middle path," he said ading one cannot damage the Himalayas, which is irrevocable, but sustainable development could and must be pursued.

Amid applause, he said the United Progressive Alliance (UPA) government was examining a holding company, called a special purpose vehicle, for investments in natural resources, so that all clearances can be obtained before their auction to private players.

Gandhi also said the reason why the Tata group could not go ahead with their project in West Bengal was because of problems in land acquisition, which, in turn, was the result of lack of proper legislation, which the Congress-led government was seeking to enact.

"The real issue is there is a cost for not having the (land acquisition) bill. India has become competitive. The central issue is the cost of bearing land. This will protect you from hidden cost. People have told me its not that bad of a bill as its made out to be."

Rahul Gandhi said while India needed some 100 million new jobs which could come by with a strong manufacturing sector, he also conceded that to help the labour market grow the could required political will to make difficult reforms in related laws.

"Old labour laws have forced businesses to use contract labour. As you know, they are often underpaid and unprotected. India needs a modern and flexible labour market where labour has a fair share and is protected by international labour standards."