Union Finance Minister Pranab Mukherjee on Tuesday said that the government was working towards containing the fiscal deficit, which had zoomed to 6.8 per cent of gross domestic product (GDP) in the wake of fiscal expansion due to stimulus package to fight the economic slowdown.
“It is not possible to sustain fiscal profligacy for long,” said Mr. Mukherjee while launching UTI Mutual Fund's investor education initiative here. He said that the government's aim was to achieve higher economic growth on a sustained basis so as to reduce poverty and remove backwardness. “Our objective is to ensure that we can come back to the higher growth not for one or two years but on a sustainable basis for 7-10 years, till we come out of poverty and backwardness,” said Mr. Mukherjee.
The Finance Minister said the objective of the growth was more wealth, more jobs, more empowerment and more entitlement. Mr. Mukherjee said the government wanted to empower people through entitlements, which were backed by statute. Giving examples of Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGA), Right to Education Act (RTE) and Right to Information Act (RTI), he said, “The entitlements for people should be back by an Act of Parliament, so that it does not remain a mere wish.” Mr. Mukherjee expressed confidence that all these objectives were backed by financial allocations in the budget.
Mr. Mukherjee has also said that the government would not interfere in the affairs of the regulators. Responding to a question relating to the tussle between the Insurance Regulatory and Development Authority (IRDA) and the Securities and Exchange Board of India (SEBI), he said all the disputes would be resolved by a committee headed by him and comprising three members from the government and the regulators in dispute.
The Finance Minister launched the investor education initiative “Swatantra” for creating awareness about the concepts of financial planning and benefits of investing in mutual funds. As part of this initiative, three UTI Knowledge Caravans would travel throughout the country covering over 300 cities in 100 days through 100 investor meets. The education initiative will be conducted in ten languages.
Emphasising the role played by household savings in ensuring the high savings rate and rate of investment in the economy, the Finance Minister stressed on the need to provide institutional structure for savings. He said that out of a saving rate of 34 per cent, nearly 23 per cent was contributed by the household savings, with the rest being provided by the private sector. In this regard, he asserted the role of no-frills accounts, use of mobile vans and business correspondents aimed at financial inclusion.
Mr. Mukherjee said that only 37,000 bank branches existed in nearly six lakh villages and technology needed to be used to reach out to the rural population.
Referring to the UTI-Retirement Benefit Fund, Mr. Mukherjee said, “The type of social security, which is available in developed countries is not available here so we will have to provide institutional structure for saving.” He said these initiatives would dictate our growth potential for future. “Effective mobilisation of savings and their seamless channelisation into investment holds the key in sustaining and accelerating growth,” Mr. Mukherjee added.
UTI Mutual Fund entered into a tripartite agreement with Bharat Petroleum Corporation Ltd. (BPCL) and Corporation Bank for providing micro pension initiative through UTI-Retirement Benefit Pension Fund to the short distance commercial vehicles (SDCV) community members of BPCL dealer network. Members of the SDCV associated with BPCL and Corporation Bank will contribute an amount of as low as Rs. 200 every month towards UTI-Retirement Benefit Pension Fund. This initiative aims at providing social security cover for the low-income group during their old age.
The investor education initiative is in partnership with the Union Ministry of Corporate Affairs.
U. K. Sinha, Chairman and Managing Director, UTI Asset Management Company, said, “Financial education is crucial for the growth of India's capital market and India will progress at a faster pace if there is higher retail participation in the capital markets.”
