Monetary and fiscal stimulus help economy recover, says Pranab Mukherjee

Union Finance Minister Pranab Mukherjee on Saturday said that there had a been buoyancy in the economy and the country was poised to achieve a growth rate of 8.5 per cent during the current year and if the present favourable trend continued the growth rate would cross 9 per cent next year.

Timely and adequate monetary and fiscal stimulus helped the economy make a swift recovery from the global crisis with the industrial sector being key driver, Mr. Mukherjee said after laying the foundation for the Rs. 900-crore ESIC Super Speciality Hospital and Medical Education Complex in the main campus of the Gulbarga University here. Industrial production recorded a growth rate of 10.4 per cent during 2009-10.

Mr. Mukherjee said that India had weathered the crisis well and the economy was much better than it was a year ago and was expected to grow around 8.5 per cent during the current year and cross 9 per cent in 2011-12.

He said that the International Monetary Fund (IMF) in its study on the financial situation of different countries had projected the growth rate of the European countries at just 3 per cent and that of North American countries, including the U.S. and Canada, at a mere 3.5 per cent.

However, the Finance Minister said that the IMF in its report had predicted that only China and India would have a sustained economic growth and projected a growth rate of 8 per cent in China and 7.2 per cent in India. “We would easily achieve 8.5 per cent growth going by the present rate of growth in different sectors”.

Mr. Mukherjee said that the 9 per cent growth rate achieved during 2003-04 to 2007-08 had helped the government transfer the benefits to the people. This had helped the government to write-off Rs. 70,000-crore loans of the farmers due to the banks and take up several welfare measures. However, the global financial crisis slowed down the growth in India and 2009-10 was a challenging year for the Indian economy. As per the advanced estimates, the growth of GDP for 2009-10 was 7.2 per cent as compared to 6.7 per cent in the previous year. He said that mere achievement of the growth rate was not enough and it should reflect in the betterment of the life and provide the people an easy accessibility of the benefits of this growth rate.

“We would have to create more quality jobs to the youths, increase the production of foodgrains to meet the growing demand, provide houses to houseless and achieve inclusive growth”.

Keeping this in the mind, he said that the Union Government had enacted different legislations. One such legislation was assured employment in rural areas through Mahatma Gandhi National Rural Employment Guarantee Scheme, compulsory education to children upto the age of 14, Right to Information (RTI) Act and other people-friendly legislations.

Mr. Mukherjee said another legislation in the offing was the Food Security Act and the Central Government was committed to introduce this act which would guarantee food to all the 120-crore plus population and all the BPL families would get compulsory subsidised foodgrains through the public distribution system (PDS) at an affordable rate of Rs. 3 a kg and each family would be supplied 25 kg of foodgrains.

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