Drawing comparisons to the balance of payments crisis of 1991 as well as the meltdown of some European economies, Singh signalled his determination to stick to last week’s reform announcements by emphasising that no government wanted to burden people but “hard decisions” had become necessary to protect the nation’s interests.

“At times, we need to say no to the easy option and say yes to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this I need your trust, understanding and your cooperation,” the economist-turned-politician said in a televised address to the nation, hours after the Trinamool Congress pulled out of the UPA protesting against the reforms.

Singh said that the task was even more challenging due to the global economic slowdown and the struggle faced by the US and Europe to cope with it. He said India was at a juncture where it needed to revive investor confidence both at home and abroad and last week’s decisions were necessary for this purpose.

Invoking his record as the finance minister in 1991 who successfully tackled the economic crisis then, Singh urged the people not to be misled by opposition parties.

He maintained that much of the rise in global oil prices was never passed on to consumers, but this had led to the subsidy on petroleum products jumping alarmingly. “It was Rs 1,40,000 crore last year. If we had not acted, it would have been over Rs 2,00,000 crore this year,” he said.

“Where would the money for this have come from? Money does not grow on trees.”

Singh, however, pointed out that the total subsidy on petroleum products was still more than what was being spent on healthcare and education put together. The inaction would have resulted in a higher fiscal deficit, which would mean an unsustainable increase in government expenditure vis-a-vis government income.

“If unchecked, this would lead to a further steep rise in prices and a loss of confidence in our economy. The prices of essential commodities would rise faster.

Both domestic as well as foreign investors would be reluctant to invest in our economy. Interest rates would rise. Our companies would not be able to borrow abroad. Unemployment would increase,” he said, trying to present a picture of the potential disaster.

The Prime Minister said that the country had faced a similar problem in 1991 and it came out of that crisis only by taking “strong, resolute steps”. “Nobody was willing to lend us even small amounts of money then,” he said. “I know what happened in 1991 and I would be failing in my duty as Prime Minister of this great country if I did not take strong preventive action.”

Singh pointed out that several European countries were not in a position to pay their bills and were seeking help. “I am determined to see that India will not be pushed into that situation. But I can succeed only if I can persuade you to understand why we had to act,” he said.

On the cap imposed on subsidised LPG cylinders, Singh argued that half of the country belonging to the underprivileged classes used only six cylinders or less every year. “We have ensured that they are not affected. Others will still get six subsidised cylinders, but they must pay a higher price for more,” he said, adding that the government had not raised the price of kerosene.

Justifying the decision to open the retail market to foreign players, Singh maintained that the decision would benefit farmers while bringing down prices for consumers without hurting small traders. “In a growing economy, there is enough space for big and small to grow. The fear that small retailers will be wiped out is completely baseless,” he said.