Thursday, September 1 2005 16:42 Hrs (IST) - World Time -

Lucknow: Expressing serious concern about the country's financial health, Prime Minister Manmohan Singh today (Sept 1, 2005) warned that economic progress could be hindered if the mounting fiscal deficit of 9 to 10 per cent of the national income was not contained.

"I feel concerned about the financial health of the country. The collective fiscal deficit of the Centre and states is 9 to 10 per cent of our national income," he said after launching the LIC "Bima Gold" policy here.

If the deficit was not contained, "the economic progress of the country could be impaired," the PM said and asked the state governments to discharge their obligations in this regard as also strive to improve education and health services.

He also worried about the mounting losses in some state electricity boards, which could trigger an economic crisis and asked all political parties to think of ways and means to meet the rising power demand of the nation.

"The electricity boards in some states are not working properly. Every year there is a loss of Rs 25,000 to 30,000 crore. Power has not reached the rural areas and the farmers are not able to make full use of it," the PM said.

The Prime Minister said if the country had to progress, the functioning of state electricity boards would have to be improved and transmission and distribution losses be checked. "We might have to provide free power to poor farmers, but if the losses continued to mount there could be a crisis," Singh said, asking public sector power utilities to learn to succeed in the era of competition and globalisation.

Laying stress on savings, the Prime Minister said money from savings could be used to fund infrastructure development. In this context, he pointed out that the government's 'Bharat Nirman' rural infrastructure development programme entailed an expenditure of Rs 1,74,000 crore in the next four years.

"If we have to arrange the fund without bringing inflation (into the picture), we will have to prepare the people to save more," he said. Singh also called for improvement in the railways, freight system, roads and irrigation and said that LIC had a big role to play in this regard.

The Prime Minister was confident that India would have the resources to rid itself of poverty and unemployment, provided the economy sustained a seven to eight per cent growth rate in the next ten years.

Stating that LIC and banks had to pay more attention towards strengthening infrastructure in backward states, he said public sector enterprises were set up with the idea of using the profits for development.

"If public sector enterprises were not able to make profits, Jawaharlal Nehru's dreams could not be fulfilled", he said. "Crores of people in the country are still below the poverty line, means of irrigation are not sufficient, health services are still not good and environment requires more attention," he said.

The Prime Minister also wondered whether it was prudent to spend on celebrations, while asking people to contribute whatever they can for the country's development. He also asked LIC to further improve its services especially to the small policy holders.

"As an ex-policy holder, I can say that it requires further improvement. Small policy holders should be paid more attention", he said. Addressing the function, Union Finance Minister P Chidambaram announced that LIC would give a special bonus to its policy holders to mark completion of 50 years of service.

All those who possess a valid LIC policy as on March 31 this year would be eligible for the bonus, he said, adding that Rs 2,100 crore had been earmarked for this purpose. Lauding the corporation for its contribution and growth, Chidambaram said LIC had planned to venture into!foreign countries in the days to come.

Earlier, the Prime Minister distributed Bima Gold policy bonds to five policy holders. Uttar Pradesh Governor T V Rajeswar and Chief Minister Mulayam Singh Yadav were among others who were present on the occasion.