Leverage global demand imbalances to create fresh demand: Mukherjee

Emerging economies can leverage the current global demand imbalances to address developmental imbalances, which in turn could add demand to the global economy, finance minister Pranab Mukherjee said today.

Addressing a conference on "Global Economic Situation: New Order Emerging?" at the Delhi Economics Conclave, he said a good way of doing that is to expand infrastructure investments in developing economies. This may well be extended to increasing investment in infrastructure generally, and a more liberal flow of technology to developing countries, which in turn could spur output and productivity growth in both advanced and developing countries, he said.

While the options for fiscal as well as monetary measures are increasingly limited, there is potential for policymaking in other areas. Economic reforms can contribute in large measure to this, he said.

The government, the finance minister said, has sought to unlock economic bottlenecks through initiatives such as the national manufacturing policy, permitting greater FDI in retail sector, direct taxes code, goods and services tax, and various legislations, including in the financial sector.

We hope that greater consensus on these initiatives will help speed up their implementation, he said.

Macroeconomic management should not be confined to economic issues alone. Economists must also be adept at addressing political and social outcomes of policy decisions, he said.