Steps to catalyse growth soon: FM

Govt will rely on market borrowing to spur growth

“Sustained stimulus to growth can be harnessed by the next round of economic reforms. We have a broad plan of action in mind,” he told reporters here. “I will get additional inputs when I have my pre-budget consultations with different stakeholders. All this will be distilled into a concrete short-term and medium-term vision and strategy for India’s economic growth,” he said. He indicated the reform programme would include measures in the area of financial sector and real economy.

Competitive & efficient

It would seek to make the economy more competitive and the economic regulatory more efficient, quick and responsive to global developments, he noted.
Talking about government’s action plan to revive the economy,he said the government was assessing the impact of the economic stimulus announced so far and necessary steps would be taken if required. Mukherjee admitted that  industry and business had been hurt by the cost of finance and its easy availability. “While much has been done in the last eight months and international capital flows have resumed, the cost and the speed with which finance can be accessed remains a matter of concern,” he said.

Action plan for bankers

He revealed that one of the first steps he proposed to take was to meet bankers and get them committed to “a more benign plan of action”.

Mukherjee further indicated that the government would focus on implementing and strengthening its infrastructure investments. The pipeline of infrastructure projects will be re-appraised and made more robust. Where necessary, policy and procedures will be calibrated to give a boost to infrastructure spending, he added. 

Mukherjee said the government would continue to rely on market borrowings to spur economic growth and restore the growth momentum witnessed earlier. The government during the current fiscal aims to borrow Rs 3,08,647 crore, about 17 per cent more than the last fiscal. As regards fiscal consolidation, he added, “We are equally committed to the process of fiscal consolidation over a period of say two to three years.” As per the borrowing schedule, the government intends to mop up Rs 2,41,000 crore from the market in the first half of 2009-10.

“Let me say unambiguously that we are committed to restoring growth and employment and that would not have been possible without increased spending funded by incremental borrowing,” Mukherjee said.

The government during the current fiscal aims to borrow Rs 3,08,647 crore, about 17 per cent more than the last fiscal.

As regards fiscal consolidation, he added “we are equally committed to the process of fiscal consolidation over a period of say two to three years.”
The call on borrowing above the H1 target will be taken after discussion with Reserve Bank of india, Finance Secretary Ashok Chawala said. “It will be front loading,” Chawala said in response to whether that would be incremental borrowing or front loading in the H1.

Front loading of borrowings means that government will borrow most of its target for the entire fiscal in the first half itself.

Asked if there is any plan to raise the borrowing target, he said, “not at this stage. Let’s discuss in the (RBI) meeting”.

The RBI and Finance Ministry officials will take a call on revising the schedule and amount of government borrowings on May 30.
The fiscal deficit during 2008-09 has been estimated at six per cent as the original target of 2.5 per cent of the Gross Domestic Product. For 2009-10, the government in the interim budget projected a fiscal deficit of 5.5 per cent.