India's re-appointed finance minister Pranab Mukherjee today refused to commit himself on whether the government was mulling fresh fiscal stimulus to boost the sagging economy. "That you have to wait till the budget is presented," he said when asked if the government was planning a fresh dose of stimulus measures.
On Saturday, 23 May, Mukherjee had said efforts would be made to insulate the economy from the adverse impacts of the global financial crisis. The re-elected Congress party-led coalition government is expected to present a full budget for 2009-10 in July.
In an interview to CNBC TV18, Mukherjee said that although maintaining growth and fiscal prudence were both priorities, growth in current times had to assume higher importance over fiscal concerns. "The goal is to bring the economy back on the growth path." However, he was quick to add that the government could not indulge in fiscal profligacy.
Mukherjee said that the government would be able to pass the budget by the end of July. "We have identified issues and areas of concern that need to be addressed in this Budget and will work closely with (Prime Minister) Dr Manmohan Singh in presenting the first Budget," he said.
According to him, certain sectors that had been adversely affected by the global crisis needed special attention. "Problems in the textile sector need to be addressed," he added.
The government, he said, needed to inject money to push growth. "Massive investment in infrastructure is needed to spur growth. We need to review resources, delivery systems to the core sector."
Mukherjee hoped that growth in the current financial year would be closer to 7 per cent. He sees growth picking up from October.
Accepting that the two financial stimulus packages and a relaxed monetary policy have put pressures on India's fiscal deficit, Mukherjee hinted that the fiscal deficit ceiling could be raised, saying it needed a "fresh look".
Mukherjee said monetary measures such as cuts in lending rates have been taken to ensure increased liquidity in the system, but admitted the move had led to the fiscal deficit swelling. "We have crossed the ceiling on fiscal deficit and have to take a fresh look at it," he said.
According to him, the full impact of the fiscal measures was yet to be realised as the government couldn't implement new policies between March and May on account of the electoral code of conduct. "However, things have started looking up and we will see a growth in the region of 7 per cent in 2009," he said.
Mukherjee referred to the National Rural Employment Guarantee Act (NREGA) aimed at creating work and increasing incomes of households in the hinterland. "NREGA ensured job security through an act of law. We have to look at ensuring food security also," the minister said.
Mukherjee emphasised the need for more private involvement in infrastructure.
"For infrastructure development I would like to move at a faster rate (as compared to the last five years) and public-private partnership in this sphere is an important mechanism for development," he said.
See: The text of Pranab Mukherjee's opening remarks at his first press conference as finance minister in the new UPA governement on 25 May 2009