The statement says the Communique endorses our call for increased banking transparency. How effective is this going to be in bringing black money back home?
Let me say I am no astrologer. We have to operate in a world where things are not entirely to our own liking. We are dealing with sovereign countries, and they will cooperate with us only to the extent that their laws permit them to do so. We are trying to negotiate new agreements: tax information exchange and double taxation avoidance agreements. It is a work in progress. First, I do not know the magnitude of the so-called black money lying abroad. Second, I do not know if we have a foolproof mechanism to ensure we can bring back this money within a short period. We have to create an environment in which our people would have an incentive to bring back this money; that it is no longer necessary for people with surplus money in India to think of greener pastures outside. I think that is the only secure, long-term way to create an environment in which we will discourage the flow of such money to foreign countries.
On tough decisions that need to be taken in India in terms of fiscal deficit, are you looking at deregulating fuel prices, cutting subsidies, raising taxes, etc?
I attach great importance to the task of fiscal consolidation. We cannot live beyond our means. And, we also have to recognise that money simply does not grow on trees. So, the commitment that we have made to the nation to have a fiscal deficit of 4.6 per cent as projected in the Budget, has to be taken seriously. Even though there are circumstances in which there may be slippages, but the general direction of our economy has to be to get the fiscal system in balance, the expenditure flows in balance and consistent availability of resources.
If in the process, we have to cut some expenditure or subsidy, I think in principle that is the only way you can manage your fiscal system. Of course, there is also scope under favourable conditions of disinvestment. These are the methods of getting the fiscal system in order. But, having said that, what we should do at any particular moment of time, is the subject matter of political feasibility.
Food inflation is at a record high, and petrol prices too have been raised. Do you see this as a fallout of what is happening across the globe?
Food inflation in our country is a problem. But, you would have noticed that within food inflation, if you make a distinction between foodgrain prices, they are relatively stable. The prices going up are of vegetables, eggs, fish — the secondary and tertiary food items. Now, that obviously is a reflection of the demand for these commodities exceeding the supply. That, in turn, to some extent, is a sign of growing prosperity of our country. Our national income is increasing at the rate of eight per cent per annum, our population is exceeding at the rate of 1.6 per cent per annum. The per capita income is growing at 6.5-7 per cent. It is bound to lead to demand for more diversified type of food basket. I am not saying this is a foolproof way of describing this complex reality. But in analysing food inflation, I think this is an aspect which must not be lost sight of.
Can the government reconsider its decision to deregulate petrol prices? Can we see the government intervening?
Well, that (deregulation) is the general direction in which we should move. I think the move to decontrol petrol prices is a part of that process. But as I said, these are very sensitive areas. And, I have no hesitation in saying ultimately we must allow markets to find their own level, except for those commodities which are in the nature of semi-public goods. We must move in the direction of decontrolling more and more prices.
Mr Sarkozy announced in his press conference that they had been seeking an agreement that countries should not prohibit the export of cereals or foodgrains or gas. Could you share the details?
I can say what Mr Sarkozy was saying. Naturally, in a world in which movements of commodities can be the subject matter of ad hoc restrictions being imposed, that creates added uncertainty. It does not help create transparency in the functioning of the markets for commodities. Therefore, in an ideal world, it is a goal to which everyone should subscribe, it should not be necessary for any country to arbitrarily impose a complete ban. But, as I said, we are in a world of politics. Our prime necessity is to protect our own population. Politicians, before they can become statesmen, must remain in office long enough.
Edited excerpts from Prime Minister Manmohan Singh’s press conference after the G20 meeting in Cannes on November 5
