India PM vows to press ahead with reforms

Indian Prime Minister Manmohan Singh vowed Saturday to press ahead with reforms to further liberalise the country's still inward-looking economy, undeterred by strong political opposition. Singh's government announced in September a sudden blitz of reforms designed to open the retail, aviation and broadcasting sectors to more foreign investment and revive an economy in which growth stalled at around three-year lows. "We will do what is good for the country... reforms are not a one-off process," Singh told reporters in New Delhi. The reforms have prompted a coalition ally to pull out of the Congress-led government and a string of protests nationwide. But they have been warmly greeted by business and investors, with the Indian currency hitting a five-month high of 52.49 rupees against the dollar Friday as more foreign investment has poured in. Singh, who was speaking on the sidelines of the swearing-in of India's new chief justice, Altamas Kabir, did not outline what new steps he plans, but analysts expect him also to liberalise the insurance and other sectors. The premier had no comment on a report by a government panel late Friday that warned India faced a "fiscal precipice" and called on New Delhi to phase out fuel, food and fertiliser subsidies to rein in a ballooning deficit. "We cannot overemphasise the need and urgency of fiscal consolidation," the panel, headed by former Indian finance secretary Vijay Kelkar, warned. India could find itself in a worse financial state than during the 1991 balance-of-payments crisis when the country teetered on the edge of bankruptcy and was forced to seek a bailout from the International Monetary Fund, the panel warned. Singh's left-leaning government is deeply wary of cutting subsidies, especially on food, in the still heavily poor country of 1.2 billion people, fearing a voter backlash in general elections due in 2014. The fiery leader of the Trinamool Congress, Mamata Banerjee, whose pullout from the Congress coalition has left it in a minority in parliament, on Saturday called the reforms an "anti-people" decision. The populist regional politician's fresh attack came ahead of a demonstration she plans to hold in the centre of the Indian capital on Monday. Reacting coolly to the Kelkar report, India's economic affairs secretary Arvind Mayaram said some of the panel's recommendations appeared contrary to the government's aim of "inclusive growth" and "food security for all". Mayaram said the government intends to soon announce a path of fiscal consolidation. But "the government is of the view that in a developing country where a significant proportion of the population is poor, a certain level of subsidies is necessary and unavoidable," he said. Analysts expect India to top its fiscal deficit target of 5.1 percent of gross domestic product this financial year with many expecting it to climb to six percent or more. Next year's budget is also likely to be populist "given that it'll probably be the last one before the next general election," said CLSA economist Rajeev Malik.