JOIN USPointing out that the economy was on the recovery path but “not out of the woods”, he said the impact of the fourth stimulus package announced in the recent budget would begin to be felt in a few months.
“A substantial quantum of money has been injected into the system, and its impact will be felt by September. There has been a slight improvement in the first quarter,” he said addressing leading businessmen on Saturday.
Stating that he could have taken the conservative path and avoided the risks, he averred that taking the risk of larger borrowings was “absolutely necessary to eradicate poverty”. The country’s economic muscle was being strengthened with NREGA. The economy would also need to absorb the adverse impact of a drought-like situation in some states. Enhancing demand for consumer durables in rural areas was one way to economic recovery, he observed.
The budgetary allocation for rural infrastructure which was 24 per cent at Rs 2,43,000 in 2008-09 has been scaled up by Rs 82,000 crore to 36 per cent this year. He said it is his target to bring down the fiscal deficit to 5 per cent by 2011-2012.
India’s growth trajectory had stood at 3.5 per cent for three decades between 1951 to 1971. In the 80s it rose to 5.2 per cent, touching 5.6 per cent in the early 90s and the high of 12.6 per cent in 2007-08. China and India managed modest levels of growth in 2008-09, but a bounce back to 9 per cent GDP could be expected a year down the line, Mukherjee added.
The finance minister also reassured the private sector that the government’s “heavy doses of borrowings” would not “elbow them out of the market”. There would be enough credit support for their needs, Mukherjee said.
Rules out special status for Goa
Finance Minister Pranab Mukherjee, on Saturday, maintained that the special category status would be retained only for seven North-East states, Sikkim, Himachal Pradesh, Jammu and Kashmir and Uttarakhand, and would not be extended to other states at present,reports DHNS from Panaji.
Skirting past a request to accord special category status to Goa, he said though the Planning Commission was guided by the Gadgil-Mukherjee formula, it would in future tailor the formula to state-specific needs for funds allocation.
No straight formula
There is no strait-jacket formula that can be adopted for everyone. Each state has problems peculiar to it. The Planning Commission will work on identifying the special problems of each state, Finance Minister Pranab Mukherjee said.