Pranab against tightening of monetary policy

Last Updated: Wednesday, September 23, 2009 - 22:03

Kolkata: Finance minister Pranab Mukherjee
on Wednesday said the Reserve Bank should not tighten the monetary policy as the government has planned to borrow huge amounts from the market.

"I am not prescribing a tight money policy", he said,
pointing out that fiscal and monetary policies adopted by the
government and the RBI to combat the slowdown are paying
dividends and signs of recovery have started to show up.

The government proposed to borrow about Rs 4.5 lakh crore
from the money market during the current fiscal against Rs 3.1
lakh crore in the previous fiscal.

RBI, which has considerably eased the monetary policy to
provide liquidity to the crisis-hit industry, is slated to
announce second quarterly review of the monetary policy on
October 27.

Referring to the growth prospects during the current
fiscal, the minister expressed hope that the country would
register over six per cent GDP growth. "Both the fiscal and
the monetary policies are working well in tandem and paying
dividends," he added.

The Asian Development Bank in its recent update on the
Asian Development Outlook has revised India`s growth
projections to 6 per cent from 5 per cent. The Planning
Commission has projected 6.3 per cent economic expansion
during the fiscal.

The minister told the Bengal Chamber of Commerce &
Industry AGM here that private borrowings would not be crowded
out as a result of the government`s borrowing programme.

On stimulus packages, he said it was not advisable at
this point to withdraw them as they are helping in the
reversal of the economic downturn.

On fiscal deficit, he sounded caution and said the
budgeted fiscal deficit of 6.4 per cent of GDP was not
sustainable.

Mukherjee said the rise in fiscal deficit had been due to
a few items of special expenditure like payments for the Sixth
Pay Commission and fiscal concessions under the stimulus
packages.

He said the target was to bring it down to five per cent
in 2011 and four per cent in 2012.

Expressing concern over the lagging exports (in dollar
terms), the minister said that from October 2008 till date
there has been no recovery.

This, according to him, was due to the downturn in the
European economies and Japan.

On the impact of drought on agriculture, he said that
the kharif crop had been affected.

However, the late rain would compensate for the loss
in kharif and the rabi season is expected to be normal.

Pranab calls for cooperation for dev work

Kolkata: In the backdrop of political
acrimony between ruling CPI-M and opposition Trinamool
Congress, Union Finance minister Pranab Mukherjee today called
for a spirit of cooperation and understanding for development.

"Political parties have divergent views, but for
development work there should be a spirit of cooperation and
understanding," Mukherjee said inaugurating the `Ecospace`
business park at New Town near here.

Earlier, state Housing minister Gautam Deb, in an obvious
reference to TC General Secretary and union minister Mukul
Roy, who left a programme here yesterday to avoid sharing the
dais with two LF ministers, said, "The Trinamool Congress does
not like to see our faces, how can development work take
place?"

Stating that the Railways required 18,000 acre for the
freight corridor and notice has been served for 9,000 acre, he
said, "It will include some farmland. What will happen
then? Will the work not take place?"

Former Lok Sabha speaker Somnath Chatterjee said the
politics of confrontation was holding up the country`s
development.

He said there was a need for introspection by political
parties and the government and both should work for
development.

Bureau Report



First Published: Wednesday, September 23, 2009 - 22:03

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