NEW DELHI, Oct 5: Indian Prime Minister Atal Behari Vajpayee warned on Saturday that tough economic decisions including the privatization of state-run firms would be required to achieve eight per cent growth, vital to curb rising unemployment.

I am told that the rate of growth of our labour force during the coming years will be such that unless we achieve an over eight percent growth, the rate of unemployment could rise further.

We simply cannot imagine such a situation, much less tolerate it, Vajpayee said at the opening of a meeting of India’s key economic think-tank, the Planning Commission, in New Delhi.

India does not release regular unemployment figures.

An eight percent growth target ... is inescapable ... to build an India free of poverty, illiteracy ... and if we want India to be capable of facing all possible challenges to national security.

Achieving these objectives will entail many difficult decisions ... (which) simply cannot be avoided, he added.

Among the difficult measures listed by the premier were the speeding up of tax reforms, strict fiscal discipline by state and federal governments, putting into effect labour reforms and to actively pursue disinvestment of PSUs (public sector units or state run-firms).

Vajpayee also said he was deeply worried about the very slow pace of power sector reforms which was one of the reasons why India’s economic growth was stagnating at around 5.5 per cent.

India launched sweeping liberal reforms a decade ago, but critics say the drive has run out of steam due to opposition from workers and political leaders, including some allies of Vajpayee’s Hindu nationalist-led coalition.

Last month India put off the privatization of the assets of two state-run oil firms by more than three months, due to opposition from the cabinet.

The privatization of the firms was part of a programme to trim the government’s budget deficit to 5.3 per cent of economic output in the fiscal year ending March 2003.

The government has so far only managed to raise one billion dollars from privatization in the current year against a targetted 120 billion rupees.

This week the Rashtriya Swayamsewak Sangh (RSS, or National Volunteer Corps), the ideological mentor of Vajpayee’s ruling Hindu nationalist BJP party lashed out at the the government for its pro-reform policies and reportedly demanded the removal of pro-reform ministers from the cabinet.

But the same day Vajpayee backed his privatization minister Arun Shourie and blasted critics.

It is incorrect to say that the country is being sold. No no one can sell this country and no one has been born who can buy India, he said.

It is healthy to have a debate on disinvestment (privatization), but to either rubbish the policy by saying that the government is selling the nation’s wealth or to conclude that the disinvestment process has stopped because of differences is wrong.

On Saturday, Vajpayee warned opponents to privatization within the cabinet that public diputes were not in the interests of the government.

The government should “effectively communicate” its strategies to the people, without whose support we cannot move ahead rapidly, he said.

Vajpayee said India had to achieve its developmental goals by harnessing its own resources, with most of the investment needed to achieve the eight per cent growth rate coming from domestic sources.

However, we need foreign direct investment (FDI) to supplement our domestic resources in areas where it would strengthen our economy and enhance our competitiveness, Vajpayee said.

But let there there be no worry in any quarter that we would follow such an FDI policy as would weaken Indian industry or hurt our national interests. This will never happen, Vajpayee said.

The meeting of the Planning Commission was due to discuss India’s tenth five-year plan and will earmark funds for social and economic development over the next five years.

The draft of the tenth plan lays emphasis on speeding up development of India’s agriculture sector and small-scale and cottage industries, Vajpayee said. —AFP