Economy's recovery validates government's policy response, says Mukherjee
Finance Minister Pranab Mukherjee on Friday exuded confidence that the measures outlined in the budget for the current fiscal would spur private investment and put the economy back on track for a nine per cent growth.
“I am optimistic that the measures I have outlined in this year's budget will revive private investment and put the economy back on the growth path of nine per cent,” Mr. Mukherjee said while addressing a function here to commemorate the Small Industries Development Bank of India's (SIDBI's) 20th Foundation Day. On the back of an expected growth of 7.2 per cent in 2009-10, which itself was “impressive by global standards,” he said the GDP (gross domestic product) expansion during 2010-11 would be about 8.25-8.75 per cent. The Finance Minister's optimism is in line with Prime Minister Manmohan Singh's statement in Mumbai on Thursday when he said “the economy can get back to 9 per cent growth by the end of the XI Plan (2007-12) and do even better thereafter.”
Mr. Mukherjee noted that although the last fiscal year (2009-10) was difficult and posed many challenges, the government's response was effective and yielded results. “There was a significant slowdown in the growth rate in the second half of 2008-09 following the financial crisis that began in the industrialised nations in 2007 and spread to the real economy across the world. The good news is that the world economy today seems to be recovering from this severe crisis. The fast-paced recovery of the Indian economy underscores the effectiveness of the policy response of the government in the wake of this financial crisis,” he said.
Lauding the micro small and medium enterprise (MSME) sector's role in the country's economic growth, Mr. Mukherjee said the government would examine the report of the Prime Minister's Task Force in a time-bound manner. Pointing to the report's emphasis on making available more credit to the small sector, he said “timely availability of credit to MSMEs is extremely important to meet their growing needs and to help them keep their business lifeline vibrant and progressive.” The MSME sector, the Finance Minister said, accounted for 8 per cent of the country's GDP, 45 per cent of its manufactured output and 40 per cent of its exports. Apart from generating the highest employment during the XI Plan, the sector helped in checking migration to urban centres.
Speaking to the media on the sidelines of the function later, Mr. Mukherjee disclosed that the Centre's direct tax collections had exceeded the budget estimate of Rs. 3.70 lakh crore for the 2009-10 fiscal.