PM defies political consensus on subsidies, inflation, fuel price

In an uncharacteristic defiance of the general political consensus on subsidies, inflation and fuel prices, prime minister Manmohan Singh has come out strongly on the side of fiscal reconsolidation and prudent economic policies.

Speaking to reporters just before heading back home to Delhi from Cannes, where he attended the two-day G20 summit, Singh said he attached great importance to the task of fiscal reconsolidation.

''We cannot live beyond our means,'' the prime minister warned. ''And we also have to recognise that money simply does not grow on trees. So, the commitment that we have to the country to have a fiscal deficit of 4.6 per cent as projected in the budget has to be taken seriously.''

Singh's United Progressive Alliance (UPA) government has been slammed by allies including the Trinamool Congress, headed by the mercurial Mamata Banerjee, the West Bengal chief minister, for having once again raised petrol prices.

Trinamool ministers and MPs have handed over their resignation to Banerjee, who wants to meet Singh before taking a decision.

''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, get the expenditure flows in balance, consistent with the availability of resources,'' pointed out Singh. ''If in the process, we have to cut some expenditure, cut some subsidy, I think in principle, that is the only way in which you can manage your fiscal system. Of course, there is also scope under favourable conditions, of disinvestment.''