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However, the easing of inflation has given monetary flexibility to deal with the difficult economic environment, the Prime Minister said.
"Growth in the current year will be lower than the last year ... Our problems will not be over in the current year.
The difficult period will continue into 2009-10," Singh said at the Economic Times Awards function here.
He said the Government would have to continue with the supporting environment next year as well. "Both monetary and fiscal policy will have to be tailored to that objective...
Fortunately the rate of inflation has eased considerably.
Inflation is now 5.2 per cent and is expected to decline further. This gives ample flexibility for monetary policy."
However, the Prime Minister said that the government has limited space for providing more tax cuts in the wake of the growing fiscal deficit even though it (the government) has to "tolerate" it for the next year to accommodate the expenditure needed for stimulating the economy.
The Prime Minister said GDP growth estimates for the current fiscal vary between 6.5 and 7 per cent. The brunt of the recession in several parts of the world is being felt in areas that had seen rapid growth earlier.
The government and the Reserve Bank have announced measures including cuts in interest rates and across-the-board reduction in excise duty to boost demand. Besides, exporters and small-scale industries have been given packages – fiscal and monetary.
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It is rather unfortunate that instead of rectifying regulatory imbalances and removing the constraints through required regulatory changes, our policy makers just go on saying that ‘the difficulties could spill over into 2009-10’. They should better evaluate the effectiveness of financial regulations to counter the problems associated with recession and make due changes to ensure financial flow towards growth oriented projects. Unorganized sector enterprises which are least affected by global recession and have better growth prospects due to huge domestic consumerism for their products and services need amendments in financial regulations. They are disallowed to access equity finances or Direct Foreign Investments. The equity based banking, finance and investments to facilitate the unorganized sector enterprises would not only help them compete with organized sector enterprises, but would also promote domestic consumerism by flow of credit to the unorganised sector whose benefits would reach to Aam Aadmi. If regulators could take initiative to promote SHG schemes for the unorganized sector, why cannot they take due steps to promote equity based banking and finance for SMEs?
The policies of the Government should be based on the successful and on the hard working people. Any policy made on the basis of poor and downtrodden will make the country as a country which does not encourage success or help them to do better. A country must be for the champions and not for beleaguered who have no initiatives in life. Of course the successful people must take care of the rest by investing their wisdom and a part of their wealth to help the poor. A country can never be for poor, it can be only for the one who strive to become rich and do some thing great. Then only it will progress. In India, it is the opposite for the sake of vote bank. Every body is playing on pleasing the beggars. The outlook of our people must change. While we become a wealthy and accountable nation, we shall also make the poor rich and not otherwise.
It is unfortunate to have Manmohan as the Prime Minister, who is not an elected represntative.He can be best be as an econmic advisor, not a Prime Minister.
We are fortunate to have Dr Manmohan sing as our PM. Udoubtadely a hones man and most qualified head of state in the world. The politicians around him and survival of Congress in next election are factors which pull him back. Well done PM. Young India believes in your capacity and honest work.