Admitting that poor people are the worst hit due to rising food prices, Prime Minister Manmohan Singh on Sunday said the government is making every effort to control inflation, which has been over 10 per cent for last several months.

“It is the poor who are the worst affected by rising prices, especially when the prices of commodities of every day use like foodgrains, pulses, vegetables increase … We are making every possible effort to tackle the problem …,” Dr Singh said on the 63rd anniversary of Independence Day.

The food inflation was at 11.40 per cent during the week ended July 31, 2010, while the overall inflation was 10.55 per cent in June this year.

It is for this reason that the government has endeavoured to minimise the burden of increased prices on the poor, he said, while exuding confidence that “we will succeed in these efforts.”

Although Singh took pride in offering high support prices to farmers since 2004, he said that this also resulted in increased food prices in the open market.

“The support price for wheat was enhanced to Rs 1,100 per quintal last year from Rs 630 per quintal in 2003-04. In paddy, this increase was from Rs 550 per quintal to Rs 1,000 per quintal. But one effect of providing higher prices to farmers is that food prices in the open market also increase,” he said.

He, however, defended the recent hike in petroleum prices saying India imports nearly 80 per cent of its requirement and the subsidy was increasing every year.

“If this had not been done, it would not have been possible for our budget to bear the burden of subsidy and our programmes for education, health and employment of the poor would have been adversely affected,” Singh said.

The Prime Minister also noted that the government has increased prices of petroleum products much less than the rise in crude oil prices in the global markets.

“It is obvious that any person or institution cannot spend more than his income over a long period of time, even if it is government. It is our responsibility that we manage our economy with prudence so that our development is not affected adversely in the future because of high debt,” Dr Singh said, apparently justifying the recent fuel price hike.

In June, the Government raised petrol prices by Rs 3.50 per litre while deregulating it. It also hiked the prices of LPG by Rs 35 a cylinder, diesel by Rs 2 a litre and kerosene by Rs 3 a litre.

Pointing out that most Naxal-affected areas lag behind development, Singh said he has asked the Planning Commission to formulate a comprehensive scheme to end neglect of these areas.

He assured that the Government will implement this scheme fully.

“It is also our endeavour that our Adviasi brothers and sisters join the mainstream of development…Apart from adequate compensation for land which is acquired from them, we should also ensure that our Adivasi brothers and sisters have a stake in the developmental projects being undertaken,” he said.

The Prime Minister said despite drought like situation in many parts of the country and global financial crisis last year, the country has performed well on the growth front.

“We were also affected by the global economic slowdown. I am happy to say that we have acquitted ourselves well in these difficult circumstances. Despite many problems, the rate of our economic growth has been better than most of other countries in the world. This shows strength of our economy,” he added.

Indian economy grew by 7.4 per cent last fiscal, after economic expansion slowed down to 6.7 per cent during 2008-09 due to the effect of global financial meltdown. This fiscal, economy is projected to grow by 8.5 per cent.

“Today, India stands among the fastest growing economies of the world…Our country is viewed with respect all over the world. Our views command attention in international fora,” the Prime Minister said.

Although the farm sector growth has increased substantially in the last few years, Singh said it is still far from achieving the goal of four per cent.

“We need to work harder, so that we can increase agricultural growth rate to four per cent per annum,” he said.

Dr Singh also emphasised raising farm production and productivity so that government can provide a food safety net to ensure that no citizen would go hungry.

The Prime Minister pointed out that the country has not witnessed any big technological breakthrough in agriculture after the Green Revolution.

“We need technology which would address the need of dry land agriculture… Our agriculture should also be able to deal with new challenges like climate change, falling level of ground water and deteriorating quality of soil,” Dr Singh said.

The Prime Minister also announced that an institute is being established in India after the name of renowned scientist Norman Borlaug.

The Borlaug Institute of South Asia, he said, would facilitate new technology and improved seeds to Indian farmers as well as farming community of other south Asian countries.

The Prime Minister said India lacks good quality of physical infrastructure and the government is making efforts in partnership with private players to upgrade the core sector.

“There is a large deficit in our physical infrastructure which affects our economic development adversely. There is a shortfall in the supply of electricity to industries. Our roads, ports and airports are not of world standards,” he said.

Stating that the Government alone does not have required funds to create good quality infrastructure, the Prime Minister said, “we have endeavoured to involve the private sector in our efforts. The steps that we have taken after 2004 to improve our physical infrastructure have started bearing fruit now.”

Citing the example of setting up of a new terminal at the Delhi Airport, he said, “We will continue to make such efforts to improve our physical infrastructure.”