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June 29, 2011
New Delhi

Transcript of the interaction between the PM and Newspaper Editors

Opening Remarks of PM


I think that there is a growing perception that this government is in siege, that we have not been able to deliver on our agenda. An atmosphere has been created in the country - and this I say with all humility - the role of the media today in many cases has become that of the accuser, the prosecutor and the judge.


Now that way no Parliamentary democracy can function and I would like to tell you that if you are taking governmental decisions, particularly big macro decisions, we don't know all the facts and yet we have to take decisions. When I was a student at Cambridge, Sir Paul Chambers, who was then the Chairman of Imperial Chemical Industries, came and addressed us on who is a good manager, who will be considered by industry as a good manager.


He told our student group that, in an uncertain world in which we live in, if 5 out of 10 decisions that I take ex-ante turn out to be correct ex-post that would be considered as a job well done. If out of 10 decisions that I take, 7 turn out to be right ex-post that would be considered an excellent performance. But if you have a system which is required to perform 10 out of 10 cases I think no system can be effective and satisfy that onerous condition.


We live in a world of uncertainty and ex-post whether it is the Comptroller and Auditor General, whether it is a Parliamentary committee then they analyse post facto. They have a lot more facts which were not available to those who took the decision.


I am not saying that it is not possible that some people may deliberately do wrong things, but in many cases it would turn out in that sort of a scenario it is very difficult to operate. So we must create in this country an environment in which Governments, Ministers and civil servants will not be discouraged from taking decisions in the national interest when all facts are not known, they will never be known. We take decisions in a world of uncertainty and that's the perspective I think Parliament, our CAG and our media must adopt if this nation is to move forward.


Our basic task is to deal with poverty, ignorance and disease which still afflict millions and millions of our citizens and whatever the ideological moorings of different parties, there is nobody who would say that you can satisfy all these aspirations of the people except in the framework of a rapidly expanding economy which is able to create 10 to 12 million jobs. For this, we need skilled citizens and we need to put in place a system of skill formation in education which is going to create employable skills which alone can provide our people the security of jobs that they need.


We have put in place an entitlement system. Entitlements have a role, but quite frankly there is a limited role. In the institutions of social security that we are trying to build, there are a large number of leakages in health, in education, and the allocation of subsidies. Our challenge is to plug these leaks and we will do that.


Corruption is a big issue. It has caught the imagination of the people, and we will deal with it. Let me say that while the Lokpal is an essential and desirable legislation, we will honestly work to evolve a broad based national consensus so that we have a viable statute in place which will give us a strong Lokpal. We have differences, there will be differences, but there are mechanisms to resolves these differences.


I certainly respect members of the civil society. It is out of my respect for members of the civil society that whether it is Anna Hazare or Swami Ramdev, I myself took the trouble to interact with them. In February-March itself I had an hour long meeting with Anna Hazare, the Bhushans, both father and son, Kejriwal and Kiran Bedi. They were all there and I assured them that we are committed to come up with the bill in the Monsoon Session and it was not a commitment made under duress. I had mentioned it to them at that time itself. I said we will introduce a Bill in Parliament but then it is for Parliament to pass it or amend it and that right cannot be taken away.


In the same way people talk about black money. Black money exists, but if you look at all European countries also the average amount of black money which is talked about is at least 25 % of the economies of a large number of European countries. These are transactions that are not taxed and intended to avoid social security payments. But this is a reality. We can deal with corruption, we can deal with black money but quite frankly it is wrong for anyone to assume there is a magic wand which will lead to an instant solution of these difficult societal problems.


We need system reforms. If the project Nandan Nilankani has promised to design, if the UIDAI can give unique ID numbers to all our residents we would have discovered a new pathway to eliminate the scope for corruption and leakages in the management and distribution of various subsidies to which our people are entitled. But it will take time. It cannot be done instantly.


Four lakh crores or whatever the figures of black money being mentioned...... I do not know what is the basis of those calculations. Whatever is possible is being done. We are in the process of negotiating double taxation avoidance agreements, tax information agreements and we have fought hard in the Group of 20 to see that the secrecy of tax saving banking systems should be modified. This is not a one shot operation. We are doing all that is possible and we could accelerate it. We are committed to pursue all that is fiscally possible to deal with these problems of black money, problems of tax evading money and corruption.


But there are other instruments. Tax evasion is one important source of generation of black money. But there are other issues - narcotics, trafficking in human beings - all these illegal activities.... we need a strong mechanism to track down these criminal elements. But in all these my worry is to avoid a situation when we convert this vast country of over 1.2 billion people into a state where everybody is policing everybody else. We must not bring back the license permit raj which we sought to abolish in 1991.


I think our nation has prospered as a result of that. If you look at the list of top 100 firms today you will find a sea change in that list today. New entrepreneurs have come into the list. These are some of the gains of liberalization which we must cherish, we must nurse and we must develop.


We are committed to a growth rate of 9 to 10 % per annum. Our savings rate is about 34 to 35 % of our GDP with an investment rate of 36 to 37 %. And with a capital output ratio of 4:1 we can manage to have a growth rate of 9%. It requires strong commitment to development and modernization of our infrastructure; a strong commitment to modernizing and making our education system more relevant to the needs of our time; it requires strong commitment to work for a universal health care system. We are now engaged in looking at how insurance can be expanded to cover all elements of our population.


These are some of the priorities of our government. But frankly speaking in our country this constant sniping between government and opposition or if an atmosphere of cynicism is created all round I think the growth impulses, the entrepreneurial impulses of our people will not flourish and that is what worries me. We must do all that we can to revive the animal spirits of our businesses. And the fact that businessmen cut corners is partly a reflection of the loopholes in our regulatory system. We must therefore reform and strengthen the regulatory system where there is a need to do so. And when it comes to the management of natural resources we need a regulatory system but it must be transparent and it must be functional and that is the next step of our government.


Despite corruption in public procurement we are committed to work towards a public procurement law which will make procurement a transparent operation, and will eliminate to the extent possible the scope for corruption.


But in the situation that we are faced today, day in day out I think we are described as the most corrupt government. There have been aberrations. But quite frankly I have been a civil servant all my life, except the last 20 years. What surprises me is not that there are corrupt civil servants but that despite all the temptations, so many of our civil servants remain honest and lead frugal lives and this is the mainspring that we have to tap.


We must punish the wrong doers but we must not paint all civil servants as babus and contemptuously describe them as a despicable class.


These are the concerns that I have and I would like to hear from you what you think of them and what we should be doing.


And let me say on the international front I think the situation is not that positive. The international global recovery is fragile. Even the United States growth rate is faltering. In Europe it is the sovereign debt crisis, the problem of the Greek crisis and whether the Euro-zone will survive or not. If it will not survive it will be a major institutional collapse.


What is happening in the Middle East is of direct concern to us. Apart from the fact that we have 6 million Indians working in the Middle East nearly 70 % of our oil supplies come from the countries of the Gulf and North Africa. What turn these events will take nobody knows.


So we have to swim against this adverse tide and therefore India requires all the energy and all the cohesiveness of our polity to swim against these tides and come out victorious. We can do it. We showed that in 2008 when most people believed that our financial system would also be a victim of the global financial crisis. We put in place correctives and we managed to retain a growth rate of 7% and next year it was back to 8 to 8.5 %. We must have the vision, the ability and the determination to prosper even when the world environment is hostile.


And because nature has blessed us with a large common market, if we can put in place the goods and services tax legislation and if we can remove barriers to interstate commerce that itself will create new opportunities internally for accelerating the tempo of growth.


These are our top priorities, these are national priorities and I invite you as very influential members of our polity to help the government to deal with these problems with courage, with clarity and with determination.


Q& A Session.


Q-1: Sir, you did not mention anything about our neighbourhood.


A: Well, neighbourhood worries me a great deal, quite frankly


You have a situation in Sri Lanka. The decimation of the LTTE was something which is good. But the Tamil problem does not disappear with the defeat of the LTTE. The Tamil population has legitimate grievances. They feel they hev been reduced over the years to second-class citizens. And our emphasis has been to persuade the Sri Lankan government that we must move towards a new system of institutional reforms, where the Tamil people will have a feeling that they are equal citizens of Sri Lanka, and they can lead and live a life of dignity and self-respect. It is not easy because within Sri Lanka's population, there are hotheads, Sinhala chauvinism is a reality. But we have to find a difficult balance because what happens in Sri Lanka has a domestic dimension also. The Tamil Nadu government and assembly have shown great worry about what is happening. Our challenge is to keep the Tamil Nadu government on our side. And I have had good cooperation with Jayalalithaa-ji. I raised this matter with her the very first time. What she asked of me was moderate. Whatever be the resolutions that were passed in the assembly, I found her fully conscious of the complexities and the realities of managing this relationship.


So a very uncertain neighbourhood. A very uncertain international, economic environment. We have to swim and keep our heads high.


Q 2 �About uncertainty between the government and the party belief that there is lack of communication.


A- Let me say that these things can be exaggerated. But they have always existed in the Congress party. I welcome the expression of views, which can be helpful at times in introducing mid-term correctives. For example, let us take the case of the criticism in the party of our handling of Anna Hazare and Ramdev. When he threatened to sit on a fast, my honest attempt was that we as a government should appear receptive to all good ideas, wherever they come from. And that is why,I was the one who encouraged this dialogue with Anna Hazare, who I have known for many years. He came and spent an hour with me. And when he went back, I felt he was satisfied. But in 2-3 days I found that there are other forces controlling him, who wanted confrontation. I consciously operated a system where our government should reach out to all civil society elements. We need their inputs, and their support to carry out a social and economic transformation of the type we need in our country. I also expected that they would also play by the rules of the game. No group, howsoever important he or she may be, can insist, that their views, A to Z, are the last word on what the people of India need. There are many other layers of NGO opinion. There is the Parliament. There are former Chief Justices of India - who have voiced differences with some of the ideas that Anna Hazare has. But it is still my hope, that we can, working together with the political parties, evolve a national consensus. And that is the effort I have made , I will make. And with regard to Swami Ramdev also, all I felt was, not to create an unnecessary misunderstanding. I wrote a letter to him myself, when he wrote to me. I mentioned that I share your concerns, with regard to black money and corruption, and we will be very happy if you have any ideas. And he responded quite well. When Pranab Mukherjee sent some officials, tax officials, they came back and said to us that Baba is very cooperative. He is not going to be a problem. And that once he comes here, he will make a statement, that the problems have been resolved. It was in that background, that our colleagues went to the airport, not to receive him but it was arranged that the meeting will take place before he enters the city. It is in that context that our colleagues went there. There also they had a good meeting. But the moment Baba is in the company of large crowds, I think that has an effect on him. We did not get the impression that he has any intention of honouring what he said. He himself said, one day I heard him, that 90 percent of their demands had been met. I also heard him say that when Kapil Sibal last wrote to him to say that we will enact a law, he said all my demands have been met. But suddenly, when it came to addressing the public, he gave a different picture.


Q -3: At 11 o clock a letter reached him, at 12 o clock there was a lathi charge. Are you aware of this?


A- Lathi charge and teargas - these are unfortunate thingsthat have happened , they should never have happened. But quite frankly, if we had allowed them to work during the day, the next day, we would have to handle a much larger crowds, and there worries that we had - because the way the Ramlila ground is located, there are some very communally sensitive issues. We didn't know with Sadhvi Rithambhara and others around - where would that lead to. It is unfortunate that this action had to be taken. I don't see - the situation we were placed in - there was any other alternative.


Q -4 Your views on bringing PM, PMO, under the purview of the Lokpal.


A- We have discussed this matter in the Cabinet last year. I for one, have no hesitation in bringing myself under the purview. But there are Cabinet colleagues of mine, who said Sir, this is not your personal concern that matters. We are legislating for the people of India. There are many members of the Cabinet who feel very strongly, that bringing the institution of the Prime Minister (under Lokpal), will create an element of instability, which at times, can go out of hand. I hope that some sense will prevail, and we would still work to find a way out. Also, the Prime Minister of India, is equally covered by the anti-corruption act. One can dismiss the Prime Minister of India most easily. All that is necessary is for Parliament to pass a vote of no-confidence. Every day, the Prime Minister of India is a 24-hour servant of the people of India. So we have mechanisms, much more effective mechanisms, in place. I am not saying categorically, one way or the other. I would like the guidance of the political parties. Some Chief Ministers have spoken. Dr Jayalalithaa has spoken. Others have spoken. Badal sa'ab has spoken. So there is obviously a divergence of opinion in the country. We have to find a way out. I recognize we need this Lokpal bill. Even though, I don't believe Lokpal is a panacea. Also, if we enlarge the mandate, the way Anna Hazare group wants it - they want 15,000 people, independent of the existing intelligence agencies and prosecuting agencies. If we want to cover every single civil servant of our country - Centre and States - I worry whether the system will be able to stand the strain. Let us concentrate on corruption in high places - which is most obnoxious - which invitesthe peoples wrath - that is a justified concern. Wherever possible, we will act, and act firmly.


Q-5 What about the judiciary?


I have been talking to a number of people about this - the serving judiciary as well as a number of other people. They have grave reservations of including higher judiciary. People say set up a separate mechanism - we have a judicial accountability bill. You set up a judicial selection board- which will look into all complaints against judges. But the Supreme Court has to ultimately pronounce on everything. How will the Supreme Court pronounce on complex issues, if its conduct itself is subject to jurisdiction of the Lokpal. I am not a legal expert. I have heard very distinguished luminaries question this particular suggestion in the Jan Lokpal Bill that the higher judiciary must also be included. This runs counter to the constitutional scheme of things. Judiciary must be encouraged to find ways and means to regulate its own affairs consistent with the spirit of the constitution. That is my preliminary feeling. But as I said, I am not going to pronounce. I would like to hear from the political parties, and if necessary, we should hear other groups also - what they are thinking on these matters.


Q-6 :Are you confident of getting a national consensus - on the bill in Parliament, given the opposition's resistance to it?


A - Yes I am confident and that will certainly be our endeavour.


Q -7: What about the cabinet reshuffle?


A - That is a work in progress.


Q-8: - Major or minor


A - I cannot tell you. I cannot predict.?


Q -9: Do you think team Anna Hazare is naive - politically innocent, or politically motivated?


A - We are still in the process of negotiation. It is not a good thing to question the motive of the people with whom you are negotiating with. I still hope we have the wisdom to come to the right conclusion. Either our people have not been good at communication. Or there are other interests at work to see that an atmosphere of confrontation is built up and sustained over a long period of time.


Q -10: What do you think of the large middle-class and celebrities that supported your government in 2009, and are now not supporting you on the Lokpal?


A - Some events - the telecom scam, the commonwealth games, they have caused genuine concerns among large segments of middle-class opinion. That cannot be wished away. So people want those guilty to be punished and I have said that whosoever is found guilty will be punished. Before the Commonwealth Games took place, I had announced from the ramparts of the Red Fort on 15th August last year, that anyone who is found guilty of wrongdoing in the Commonwealth Games, we will bring him or her to book and that comment still stands.


Q �11 : There is an impression that with your government being unable to bring regulatory measures to prevent corruption, you have conceded space to civil society - who are now forcing you to do it?


A - Well there are only 24 hours a day. I spend 18 hours a day on work - without any holidays. Then there are so many extraneous issues - that affects the ability of the government to attend to essential things of the type that we want to do. It will be wrong to say that I am not affected by such things - it does affect me. Many things which are said which we are accused of are not reality. I have always said that we operate in a system where I would like the media to respect the dictum that facts are sacred. I think when facts and opinions are mixed, and conclusions are drawn, where either the government or its functionaries are shown in bad light - I think matters of the court should be left to the courts. Once a case is sub-judice, people in the media must respect that people are innocent till proven guilty.


Q-12:� The judiciary has also made some strong statements?


A- The Supreme Court justification is that these questions and answers are necessary to get answers from the Bar about things that are bothering them. But they say the way the press uses them is the real problem. I have talked to the judges and they said the question answers are in order to clarify the way but they said that it is the press who should recognise this that they are not orders.


Interjection - But some of the Judges statements are virtual opinions?


A - But, I think everybody should exercise restraint. . When I talk to the Judges they tell me this is not our intention to say that these are our orders or instructions. We ask these questions in order to clarify the issues. But the press, in the way it uses them that causes sensationalism.


Q -13: There was a hope that UPA-2 would push faster on reforms. That record two years down the road has been a disappointment. What is the agenda for the next 8-9 months.


A-I think the first thing necessary is to sustain the momentum of growth that we have built. Second, we must ensure that infrastructure does well, is well-managed, its reform is a priority concern. It is in this context that the procurement system in the public sector must be made more transparent - we are all working towards a law on procurement which will lay more emphasis on transparency. There are new issues that have arisen, with regard to the management of scarce natural resources - particularly the land question. The land acquisition bill requires modification, we are working at it. There is the Food security bill , there are several debates our government on this - but ultimately it is my hope that we will have a workable draft of the Food Security Bill - and finally - with regard to education and health - we have a large agenda. I would like to start a system of vocational education, skill formation, there is a report from Dr Ramadorai - to help me in putting together a design of the sort of systems and working procedures we need. The same way I have got a group in the Planning Commission working on how we can expand and ultimately generalize the healthcare insurance system. Plus through citizen's charters create an environment in which leakages in the disbursement of subsidies can be got rid of. I have been told that the system that Nandan Nilekani is at work on - if that process goes ahead , we will have instruments to deal with wrong use of subsidies. In the long run that will be a massive effort. There are other issues also - the consensus that emerged until a few months ago on the Good and Services Tax - but the BJP is clearly playing politics, they do not want the government to pass this landmark legislation. But I still hope that it will be. The insurance bill, the BJP should have no problem , we had helped them pass the first insurance bill. All we want now is to increase the share of FDI to 49 percent. The bill is in Parliament. I hope we can still persuade the opposition and other parties to work with us. Our Insurance industry needs that capital. Domestic industrialists don't have that large capital base therefore they need that support.


There is also the question of supply-chains being improved in the distribution of food. This is where the question of FDI in retail comes in. There is a big debate about it in government and Parliament. There is fear of small traders, where as the other side is that without breaking institutional barriers to improve the supply chain system we will never solve the problem food inflation. I m hoping we can make a beginning in that area. These are some of the ideas that are uppermost in our mind.


Q �14:- There are occasional voices in your party that Rahul Gandhi should take over? What is your opinion?


A-I am sure that the Congress Party and the Congress President have entrusted me with this job to do. I have not got any contrary view from the Congress High Command. In fact, the Congress High Command has been most supportive, particularly Mrs Gandhi. Therefore, if you ask me, the general proposition - that younger people should take over - I think it is the right sentiment. I sincerely hope that whenever the Congress Party makes up its mind, I have no objection to step down. But so long as I am there, I have a job to do.


Q-15: There is a feeling of a drift in the government - the coalition itself is cracking up. There is a question about the longevity of your government.


A-There are some points of tensions. But I am confident that no one wants an election at this time. Therefore, the self-preservation instincts will work to our advantage. We can manage these tensions within our coalition.


Q-16:-Do you think you should have dealt with your coalition partners more firmly in your earlier term?


A-I really don't know which is the golden mean. I don't know if some of these things could have been avoided. Because some of these things which have happened, they have happened without our Government getting the full picture. Take the case of the 2G auction. I had myself written to Raja, that we should consider auction. He wrote back saying this matter was considered by TRAI. TRAI came to the conclusion - which was endorsed by Telecom Commission - this is on record and it is a public property - you also have access to it. He said to me that TRAI is against auction. TRAI is also against other verification which would help the competition between the new and the old. Quite frankly, I felt TRAI exists to advise the government, it is an expert body. And therefore, I left it at that. On the same matter, three letters that he wrote to me, he assured me that utmost transparency, fairness and objectivity will be observed in anything that he has done or will do. When a cabinet colleague makes that sort of an assurance, I cannot sit in judgement. It is much later that some people came to the CVC . The CVC then passed it on to the CBI. The CBI began investigating. They raided the offices of the ministry.


Q-17:One of the biggest assets you had was your integrity and honesty. But in the second term, while your personal integrity remains above board, there is an impression that you allowed these things to happen.


A-If a cabinet colleague tells me, that in all matters of his ministry, he will scrupulously work by the norms of ethics, fairness and transparency. How can I conduct a post-mortem? I am not an expert in telecom matters. As Prime Minister, it is not that I am very knowledgeable about these matters. Or that I can spend so much of my time, to look after each and every ministry. Ministers administer their departments, and if they don't apply any policy change, they are free to implement the policy to the best of their ability. One observation that my private secretary recorded, that the Prime Minister says must keep an arms distance, deliberately because if the Minister takes a decision it is his responsibility - rather than saying that the Prime Minister has also endorsed it.


Q-18:-The issue was on the boil on the front pages of newspapers every day. There were questions being asked.


A-If I go by the newspapers, there were people writing to me on both sides. There were members of Parliament, who first suggested auction. After talking to Raja a distinguished Member of Parliament and former telecom captain said the present system should be allowed to operate. You must recognize that there is intense rivalry. It's a question of allocating state's resources in a complicated environment - there were intense rivalries. I think these rivalries have played havoc with our ability to objectively examine the record. If I go by the newspapers everyday, I do not know what I will be able to do other than refer everything to the CBI, briefing myself on what is happening what's gone wrong and I would have to operate a system in which the CBI would sit in judgement. Policemen are by nature suspicious. And if the statement is correct that ex-ante if five out of ten decisions are right and five wrong , without questioning the instinctive reaction of the Policeman is ex-post there must be something here. Well if we create such an atmosphere the public sector would not be able to perform. I have a great worry about the forces we have unleashed in the country. And there is a big danger of willy-nilly establishing a police raj which will destroy the ability to use the vast entrepreneurial resources that this country has to give a new lease of life to the growth momentum processes.


Q-19:How do you propose to recover the lost ground on this?

A-My conscience is quite clear. It is quite possible that I may have been soft, for example, the terms of reference of the inter-ministerial group. It is certainly true, because the system was not working. Maran did not call a meeting of the group for a whole year. He insisted that this was within the terms of reference of the rules of procedures. And I was told that this may be true that it was within the rules of procedure but there was a cabinet decision of 2003 which said that the telecom pricing matters will have to be discussed with the group. So we said if this is the case we don't need the other thing and this is the background to our decision.

Q-20:What about the CAG draft report on KG Gas?


A-I have not read the full report. This is a special report which the ministry themselves had asked for. And this is a draft report and after clarifications if there are any irregularities there are mechanisms to correct them. But it is still premature.


Interjection - I understand from sources within the CAG that it took them 16 months to get the data.


A- Well I think the CAG also leaks. It is not the function of the CAG , It has never been the case that the CAG has held a Press Conference as the present CAG has done. But nobody is commenting on all this. It is not right for the CAG to go into issues which are not the concern of the CAG, it is not the CAG's business to comment on policy issues. I think they should limit themselves to the mandate given under the constitution. We are now a permissive society, I think if the media can get away with murder so can the CAG.



Q-21: Regulatory bodies


A-We have put in place regulatory bodies.


Q-22: What about the bugging issue?


A-There was a complaint that the office was bugged. I asked the IB to do a thorough check. The IB reported back to me that there was nothing of the sort.


Q-23:Did it go through the Home Minister? Did he know?


A-No. This was on a need-to-know principle. As Prime Minister I asked the IB to satisfy me, that there is nothing of that sort.



Q-24:There is a perception that Sonia Gandhi is deciding everything and you are helpless.


A-I am not helpless. Whatever bad things that this government has done I accept full responsibility. I have had maximum possible cooperation from the Congress President. I never felt that she was an obstacle to things that we want to do. My relations with her have never been better. I meet her every week on one to one basis before we meet the core group together.


Q-25:What about the diarchy - she heads the party and you the government - is it not working anymore?


A-. Well she has been a support to me. She has done a superb job of being the President of the party for more than 14 - 15 years. ... Some Congress state governments are in trouble, there are issues which require urgent attention to which there are no easy solutions. We have to face the problem of Telengana and all these things. Some times if these tensions are not handled well I worry about the unity and integrity of our country. The political processes ought to be conducted in a manner that nobody does anything which hurts the unity and integrity of our country. I have in moments of inspirational need read Panditji's letters to the Chief Ministers. The concern about the unity and integrity of India comes above all in his letters. That we should do nothing to hurt the cause of our nation's unity, integrity and its secular character. That's what all of us in this country can do stand together.


Q-26: UP situation law and order - women's safety.


A- I think the law and order is a state responsibility. I don't think it would be proper for me to comment. But there are problems in several areas, in many states women belonging to scheduled castes/ scheduled tribes face problems. But one thing there are certain cases that are tackled via the Right to Information Act. It has been misused also. But it has the great advantage that now when these things happen they cannot be pushed under the carpet.


Q-27: Relations with Mayawati.


I have talked to her from time to time. My relations with all Chief Ministersare quite good. I don't allow party differences to come in the way of conducting centre - state relations between the Chief Ministers and the Central government.

I talk to her quite often and I would say she is quite nice to me.


Q-28: Latest NSG action.


A- NSA Mr. Menon would answer


NSA- We have bilateral commitments from each of our partners. They have assured us that they will meet those commitments. They don't see it as contradictory. Frankly we don't know what they have decided yet. So we will see how it works out. Each of them tells us after all when we did Koodankulam one and two we did not have full scope safeguards, but we did it.


PM - Well on my visit to France in July I was the chief guest at the 14th of July celebrations and at the banquet hosted by President Sarkosy we had the issue that some people are trying to modify the guidelines of the Nuclear Suppliers Group that technology should not be sold to non NPT countries. And the President assured me, in front of all the people present he said that you can take it from me I am willing to go public that we stand by our commitments.


The Russians were also keen to set up joint ventures with us. With reference to the United States to be fair to them even before we signed the agreement they did not...


Q-29: There was a question of rotational chief minister in Jammu and Kashmir?


A-There was a decision of the Congress high command that they would have a full-term as Chief Minister. We have not done anything to reverse that decision.


Q-30: What about the current situation in the state?


A- Pakistan now has its own internal problems. We have to keep our fingers crossed. If the Pakistan army mobilizes, that could also create a tension-point on our borders. We have to be on our guard. We hope Pakistan will leave Kashmir alone, because they have their own share of internal problems. Tourists are returning. We have to keep our fingers crossed.


Q-31:What about the current situation with regard to Pakistan? Will you undertake a visit to Pakistan?


A- I have always said that there must be something solid before I can visit Pakistan. We should have solid evidence that they have stopped using terror as an instrument of state policy. Jaish e Mohammad, Lashkar e Toiba, Lashkar e Jahnvi, they are all offshoots of the ISI. We are not a big player in Pakistan. But whatever our role, engagement is a commitment to our shared geography. They have not done enough on terror. I still feel they need to do more. We need to keep engaging them.


Interjection - They have not done enough on terrorism?


A- Its goes without saying.


Q-32: Is there any possibility that Indian companies will be able to access natural resources in Afghanistan?


A- Its very much a function of their law and order situation.Transit through Pakistan - Pakistan is not ready. Afghan trucks can come upto Wagah. Afghanistan is quite keen. But we also have to reckon with Pakistan's capacity to protect our enterprises. Situation on the ground is not that good.


Q-33: What are your views on the American pullout from Afghanistan scheduled by 2014?


A-It does hurt us. It could hurt us. No one knows what is going to happen in Afghanistan. Yesterday, I was talking to the New Zealand Prime Minister, In the west, the war in Afghanistan does not enjoy large-scale public support. That's the reality. If they hold elections every four years, politicians have to be re-elected before they can become statesmen.


Q- 34: In Afghanistan there is also the question of good and bad Taliban?


A-I told the Afghan Parliament that the reconciliation should be Afghan-led. I think Karzai and other politicians can work on that. You cannot carry the good-bad Taliban distinction much too far. but the Haqqani group �they are a more determined group - perhaps not in league with the Pakistani establishment - I don't know - but we are worried about them.


Q-35: What about our defence preparedness in the light of Chinese capabilities?


A-We have started the process. We are looking at the modernization of our armed forces, including the navy and the air force. For the first time in many many years, we have added two divisions to our army. So within the limits of our resources, - we are doing - much advanced air fields in the border areas. We are trying to strengthen the border roads. Also to see, that states on our border - our villagers have access to electricity using solar power. We have not done as much as we thought of doing. The effort is on.


Q-36: The defence expenditure as a part of GDP has been falling from year to year.


A-That is true. But quite frankly we have not restricted defence spending - no conscious decision has been taken to any fixed percentage. We are as a nation, prepared to live with a defence expenditure equal to three percent of our GDP. IF the armed forces have a plan to raise their expenditure to that ceiling, the system will be able to tolerate it.


Q-37: It will take 10 to 15 years for all of this to materialize?


A.The Chinese are far ahead of us. They are building a blue-water navy also. Aircraft carriers - they are acquiring.


Q 38: -A major threat is Naxalites


A-We are tackling that problem at two ends. We are strengthening the development work in the 60 districts. This year we have put at the disposal of the Deputy Commissioner, SP and the District Forest Officer, large sums of money for each of those districts. Money is not a problem. But the main problem is infrastructure. We need to protect the building of roads. There is a proposal to raise a reserved battalion to protect the building of development works in the Naxal-affected areas. If that goes through, I think we will provide greater security to contractors willing to build roads and other infrastructure in those areas. It is a vicious circle. We must strengthen the police and other intelligence. One emphasis is on intelligence so that they match them in actual combat. The other is on development. Development is the master remedy to win over people. If my children are in school, better health facilities are available, if forest rights of tribals are respected, ---- implemented, it should win over people. In the short run, government's writ must run.


Q-39:Your environment minister is on record, saying he has had to reverse many of his positions under pressure from you?


A-I think he is right.


Q-40: Are you pressurizing him?


A- As Indira Gandhiji said, poverty is the biggest polluter. We need to have a balance.


Q-41: Mamata Bannerjee in West Bengal and Sharad Pawar in Maharashtra are opposing the gas price hike. How is this effecting the functioning of the coalition?


A- I have nothing much to say about these tensions.


Q-42: At Air India, the situation seems to be getting from bad to worse. What is the government doing about it?


A- I was discussing this with the Principal Secretary only yesterday. I think I have to tell the Pranab Mukherjee led group to expedite considerations on the proposals that are in the offing. So I am aware of it. There was some difficulty in paying salaries last month.


Q-43: In terms of perception, Your second term seems to be somewhat of a disaster. Your credibility has been damaged and you have become a lame duck Prime Minister.


PM: Much of these happened in the first term. ...(interjection) This is the result of the clever propaganda of the opposition. Because whatever we are discussing today it was already in the public domain when elections were fought. This is nothing which happened now, I think.


Q-44: On Commonwealth Games.


PM: The Commonwealth Games bulk expenditure was incurred before 2009 elections and what could we do. As far as the Commonwealth Games were concerned, there was a group of ministers under Arjun Singhji, then there was a group under Jaipal Reddyji. As far as Kalmadi's presence is concerned, you have also written Mr. Ninan that our friend Mani Shankar Aiyar wrote to me, but he wrote to me on purely ideological grounds - he was opposed to spending that much money on hosting the CWG.


Interjection- Sir but bloating budget and


A - That is the job of his Ministry- to tell us because all the budgets were the responsibility of the of the Sports Ministry- they had to come to the Cabinet. I have no mechanism in the Prime Minister's Office to look at all the minute details of the Budget. Mr. Mani Shankar Aiyar wrote many letters to me. These letters were all on ideological opposition to spend so much money on the Commonwealth Games - we should be doing more in other sectors. He did not bring to me anything wrong that was being done. At one stage, I did get worried - I did get reports but at that late stage we were able to put some officials under Jarnail Singh to keep a watch. Question is how effective was that supervision. But Kalmadi was there because he was the President of the Indian Olympic Association. The agreement to host the CWG was signed in the year 2003 when the previous government was in power.


Q-45. Lameduck PM?


PM: Well I every reason to have reason to believe that ultimately truth will prevail.


Q-46. Inflation


PM: I agree. Quite frankly - I did not anticipate the effects of shock injection of liquidity into the system by the United States. I could not anticipate that the Middle East would once again go into turmoil. Commodity prices, food prices, energy prices are variables over which we have no control. And if you exclude these I think the rest of the inflation is still marginally above what would be considered as inflationary. Now we have the no magic wand to bring down international commodity prices - particularly of food grains - we cannot force our farmers to part with their food grains for procurement at unreasonable prices. That will be suicidal to our farmers. One thing what this Government has done is, it has increased the procurement prices in a manner like no one has increased in the history of the country.


Interjection : That is the root of the problem.


A- No, it may be the root of the problem but that is also our safety net. That agriculture is in good shape. That we have today all time high stocks of foodgrains. We have at long last been able to reach out to large numbers of our people.


Q-47:The Food security law wants 80 million tones procured, that is impossible.


A. I think maximum that has been procured is 57 million tonns. , the average procurement for the last couple of years is 55 million. We have to work a system within this.


Q.48: How would you control Inflation?


A. Inflation is a global problem. Today the Chinese inflation rate for example has also gone up very sharply. And there is so much liquidity in the world, and in an integrated world economy we cannot wish away some problems. Now I believe if oil prices soften and if commodity prices remain where they are we will be able to bring down inflation. I asked Dr. Rangarajan the other day and he said that by the end of March, we should have an inflation rate of 6.5 percent.


Q.49: Have you seen the Chinese figure on hidden debt - all of it has suddenly emerged.


A. The Chinese system is opaque. They have a very small visible fiscal deficit. But there are reports that the banking system is financing their infrastructure out of their non-performing assets which is leading to debts.