Stimuli to stay, avers Pranab

Steps to push economy on recovery path

“We will continue to take short term measures—both fiscal and monetary— to help the economy recover from the impact of global slowdown,” Finance Minister Pranab Mukherjee said inaugurating the two-day Economic Editors Conference here.

“We will put into place necessary measures as and when we feel  necessary to put the economy on firm path of recovery,” he said.

Mukherjee said “at the moment we are not thinking of exiting from stimulus packages. These will continue till the economy gets back to sustainable phase of recovery.”

However, he said while the priority of the government is to put the economy back to trajectory of growth rate of 8 to 9 per cent, due attention would be given on bringing the economy back to path of fiscal consolidation.

“It is an imperative to come back to the path of fiscal prudence, as soon as the current economic circumstances permit us to do so. Fiscal prudence is critical for maintaining a stable balance of payments, moderate interest rates and steady flow of external capital for corporate investment,” Mukherjee said.

PSU divestment

On PSU disinvestment Mukherjee said after the overwhelming response to NHPC and Oil India IPOs a few other public sector undertakings have been identified for sale of small portions of government shareholding in the domestic market and for issue of fresh equities to meet their fund requirements, if required.

This is in keeping with the stated policy that government equity should not fall below 51 per cent and it retains the management control of the company, he said. Significantly, a note prepared by the finance ministry indicated that the government would consider disinvesting its stakes in profitable listed public sector units when these come out with follow-on offers.

It said the government would focus first on these listed profitable public sector companies where less than 10 per cent stake is held by the public.  It said the government can go in for either fresh equity or direct stake sale, or both, in the IPOs.
on inflation, Mukherjee said the government was sensitive to plight of people due to rise in prices of essential commodities especially food items.

“We have been taking measures to tackle the supply constraints of essential commodities. We have allowed liberal import of essential commodities to ease pressure on prices,” he said.