A day after presenting the budget for 2010-11, Union Finance Minister Pranab Mukherjee said the Centre was committed to further fiscal consolidation and the roll-back of fiscal stimulus would be gradual and calibrated.
Addressing industrialists at a function organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), Mr. Mukherjee announced the likelihood of the Centre reviewing the export strategy as sustaining the recovery was suspect.
While pointing out that he had taken the first few steps in partially rolling back the stimulus package in his budget proposals, Mr. Mukherjee underscored “the issue of the necessity and the timing of its withdrawal in a gradual and calibrated manner.”
Underlining his commitment to “fiscal consolidation in the interest of the economy's capacity to sustain growth in the medium to long-term,” the Finance Minister stressed that this was subject to the ‘sufficiently robust' recovery of private demand (both consumption and investment).
He exhorted industry to respond favourably emphasising that growth could be sustained over long periods only through rapid investments.
“It was the prime driver of growth in the last five to six years and it has to be the prime driver at least in the next 10 years.”
Mr. Mukherjee talked of the need to pursue the factors underpinning the recent spurt in growth so as to quickly gain the momentum, while stressing that the fundamentals of the economy were strong. Claiming that the positives outweighed the negatives, Mr. Mukherjee hoped “to see the economy breaking the double-digit growth barrier in the near future,” which he regarded as a prerequisite for reducing poverty in the country. The main areas of concern pertained to the persistence in the momentum in food prices and whether the recovery of exports was sustainable, Mr. Mukherjee said.
He explained the inflation as “supply side bottlenecks in some of the essential commodities, precipitated by the delayed and sub-normal south-west monsoons.”
Addressing his other concern on the sustainability of export recovery, the Finance Minister said that with recovery in developed countries being uncertain, the need was to “relook our strategy. We need to diversify our export markets to recover some of the growth momentum.”
Rajan Mittal new FICCI chief
Vice-Chairman and Managing Director of Bharti Enterprises Rajan Bharti Mittal took over as President of Federation of Indian Chambers of Commerce and Industry (FICCI) on Saturday. Mr. Mittal succeeded Harsh Pati Singhania after the conclusion of the 82nd annual general meeting of the chamber.