Corruption a stain on India's global image: PM

Indian prime minister Manmohan Singh speaks during the Delhi Sustainable Development Summit 2011 in New Delhi on February 3, 2011 (EPA)

Prime Minister Manmohan Singh on Friday said "the menace" of corruption was tarnishing India's image overseas and demeaning it at home.

His warning followed the arrest this week of his former telecom minister over an alleged $40 billion mobile phone licence scam -- the latest in a raft of scandals to batter the government.

"Corruption strikes at the roots of good governance," Singh told top state government bureaucrats at a meeting in New Delhi.

"It dents our international image and it demeans us before our own people," he said, adding that the problem had "to be faced frontally, boldly and quickly."

His speech came as his government struggles to counter opposition charges of inaction over a series of scandals, including last October's hugely over-budget Commonwealth Games, in which investigators found suspect contracts.

They have added to mounting public anger over high food prices, creating a toxic mix for Singh's Congress-led administration less than two years into its second term.

Singh enjoys a reputation for honesty in India's murky political world, but has been criticised for failing to prevent the scandals and for delays in exposing those responsible.

Along with legislation, the prime minister said it was necessary to revamp administrative practices and procedures.

"The introduction of competition, greater choice and modern technology can cut down the opportunities for corruption," he said.

In the same speech, Singh also warned that high inflation -- particularly in food prices -- was threatening India's rapid economic growth.

Surging food costs have pushed overall inflation to 8.43 per cent and a rise in crude oil prices to over ê100 a barrel is fuelling the problem.

Official data on Thursday showed annual food inflation running at 17.05 per cent.

"Inflation poses a serious threat to the growth momentum," Singh said, while calling for a "paradigm shift" in India's antiquated production and distribution methods to improve the availability of goods.

India's central bank has already hiked interest rates seven times in under a year and a further rise is expected later this month.

Some analysts fear the aggressive hikes could slow India's near-nine percent growth rate and jeopardise the government's goal of attaining the double-digit economic expansion it needs to significantly reduce poverty.

India's stock market has already slumped this year and analysts say any signs that inflation is spinning out of control could scare away badly needed global investors.

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