India to fight poverty, but not at cost of growth

India's prime minister pledged on Monday to fight poverty and share the wealth of economic success as his government nears the halfway mark of its first term, but said he would not do so at the cost of strong growth.

Marking the second anniversary of his communist-backed coalition's ouster of a Hindu nationalist government, Prime Minister Manmohan Singh said India was now less fractious and more united and inclusive, and the government was more open.

But he said there was a long way to go.

"We have to build a more caring, yet competitive economy," he said in a brief 15-minute speech broadcast live nationally by state television but only in part by private stations.

"We will ensure that we maintain fiscal discipline and manage our resources with care. No government can spend its way to prosperity.

"Our economy has been doing reasonably well these past two years. To sustain and increase the growth rate and find resources to support the poor we have to manage our finances with wisdom and foresight."

Asia's third largest economy has grown an average 8 percent a year over the past three years, driven largely by consumer demand from the new middle class and soaring foreign investment.

The central bank expects growth of 7.5-8.0 percent in the fiscal year ending March, 2007, putting the world's second most populous nation -- with more than a billion people -- among its fastest growing economies.

Singh's government defeated the Bhartiya Janata Party two years ago on widespread anger among the urban and rural poor who felt they were not sharing the benefits of the economic boom.

The government will reach the halfway point of its scheduled five-year term in six months.

India's first minority Sikh prime minister said communal and caste tensions had eased under his government.

"We have been able to handle internal security issues effectively and with greater sensitivity," he said, wearing his trademark light blue turban.

"The communal situation shows a marked improvement."

Thousands died in Hindu-Muslim bloodshed in western Gurajat state in early 2002, some of India's worst religious violence.

Unlike last year's anniversary speech, Singh touched only briefly on foreign policy, saying relations with neighbours and major powers had improved under his rule.

Just days before he flies to Kashmir to talk to various groups there, a report on the government's performance said talks with Pakistan had made significant progress.

South Asia's nuclear powers came close to war in mid-2002 over the Himalayan region which touches deep emotions on both sides and has triggered two of their three wars.

Reuters

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