Saturday, October 8 2005 14:12 Hrs (IST) - World Time -

Chandigarh: Observing that the country was witnessing 'unprecedented sustained growth' of economy and had become the third most attractive investment destination, Prime Minister Manmohan Singh today (Oct 8, 2005) said massive infusion of funds was required in infrastructure sector to maintain it.

"We need a massive infusion of investment in the infrastructure sector. We have taken important steps to accelerate this process but much more needs to be done, without delay," he said addressing the concluding day's session of the two-day Congress Chief Ministers' Conclave here.

Identifying employment, education and health as sectors requiring more spending, he said, "It is also essential that we improve the quality of governance, at all levels, and implement some key initiatives we have taken to redeem our pledge to our people."

In his 30-minute speech, the Prime Minister said that the 'good news' was that the economy was on the move.

"We are witnessing unprecedented sustained growth of the economy at the rate of over seven per cent per annum for three years in a row. In the last quarter the growth rate touched eight per cent," he said.

Singh said the rate of inflation was under control despite 'enormous pressures' on the energy front.

"The rate of investment is rising and business expectations are bullish," he observed.

He, however, said that one the one hand the economy was moving at a good pace and there was an air of optimism, on the other hand there was 'persistent cynicism about Governments and governance.

"We cannot ignore the growing desire of an increasingly informed people for better governance, for higher standards of morality and for courage in dealing with the challenges at hand. Populism and populist gimmicks no longer impress people, Hard work does," he said.

Singh said some infrastructure sectors like Telecom, Railways and Aviation were showing rapid improvement and pointed out that through adoption of VAT by most states, the tax system has improved vastly.

"India has become the third most attractive investment destination after the United States and China. Our efforts towards creating a more peaceful neighborhood have been noted and we are making steady improvement.

"On the whole both the polity and the economy are fairly healthy and robust. The progress is our relations with major powers has also boosted confidence in economy," he said.

'The country should be able to sustain the momentum'

The Prime Minister said that the country should be able to sustain the momentum if nothing untoward happened.

"However, it also requires hard work from all of us," he said. Noting that the fiscal deficit remained at 'unacceptably high levels', Singh said the fiscal health of the Central and State Governments must be improved.

"While revenues are rising, so is expenditure and we are in danger of sliding back on our commitment to fiscal responsibility," he said.

Singh said State Governments have an especially important task at hand to improve their finances and deploy them more productively.

Referring to the 'alarming decline' in agricultural growth in the 9th and 10th Plan period, he said, "This must be reversed."

"Without stepping up the rate of growth of income and investment in agriculture it will not be possible for us to step up the overall rate of growth of the economy and generate employment opportunities. This is an area where the State Governments have a critical role to play."

The Prime Minister said that since the growth in agriculture has not been at the required pace in recent years, the Government has taken a number of steps to alleviate the problems of farmers, such as improving and enhancing the flow of agricultural credit, increasing investment opportunities and storage facilities and launching of a National Horticulture Mission to increase the output and trade in fruits and vegetables.

Promoting research and training in agriculture was another measure.

He said to spread the benefits of advanced research and training to farmers, Krishi Vigyan Kendras should be set up in every district by 2007.

Large parts of the country were still dependent on rainfall and the focus should be on removing problems of farmers in dry land areas, he said.

Singh said the development programmers undertaken under Bharat Nirman will improve rural infrastructure and added that the Government has taken several measures to address directly the requirements of rural credit.

As against the announced target of Rs 1,04,500 crore, credit disbursement during 2004-05 to agriculture and allied activities was Rs.1,15,243 crore, he said adding that the Government was committed to the reform and revitalization of rural cooperatives.

"We need commitment of states to put in place the plan to revamp the cooperative credit system to make rural credit cheap for the farmer," he said.

'To undertake a massive People's Mission for Water Conservation'

Noting that water agenda was 'most critical' to the country's agrarian economy, he said, "We now have opportunities to undertake a massive People's Mission for Water Conservation."

He said the Ministry of Panchayati Raj was working on a Mission that would orient panchayats and citizens to invest on water agenda. Besides, a National Rain-fed Areas Authority was being set up to focus on solutions for dry-land agriculture, he said.

While the lower end of agriculture in the rain-fed areas can be improved through such an intervention, the higher end needed to diversify, he said adding that the Union Ministry has been trying to persuade states to amend the Agriculture Produce Marketing Laws to diversify agriculture.

"I would request Chief Ministers of Congress states to complete this at the earliest," he said.

The Prime Minister said that time has come to recognize that with increasing urbanization, urban renewal was also a major development challenge.

"State Governments have to grapple with this challenge in an imaginative manner, given the constraint of resources," he said.

Singh said that an Urban Renewal Mission would be launched on November 14 through which funds could be made available, provided certain urban reform measures were undertaken.

He, however, said a 'humane and development-oriented' approach should be adopted in dealing with slum improvement and clearance.

Asserting that 'bold initiatives' are called for on the economic front, Singh said he would like to see an improvement in the public finances at all levels of Government, especially State Governments.

"We must reduce subsidies for the rich and divert these resources into investment and employment generation.

There is an urgent need for the restructuring of public expenditure," he said adding that if resources had to be generated for investment and employment generation, bold decisions had to be taken to generate revenues and alter the profile of expenditure.

Pointing out that the cutting edge of governance was in the states, Singh said the Centre could at best offer funds and propose policies.

"The cutting edge of Government, the delivery of public services, the interface between Government and the people, is at the State level," he said.