Pranab against tightening of monetary policy

Pranab against tightening of monetary policy 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