New Delhi, July 07: Finance Minister Pranab Mukherjee on Monday said that he has taken tremendous risk to return to higher growth rates by opting for higher deficit and hoped to achieve nine percent growth next fiscal.
“I have taken the tremendous risk to create the fiscal space of having higher deficit. I could have gone for the more conservative way of reducing the deficit and spent myself with six or less than that percentage of growth,” he said to a news channel soon after presenting the Union Budget in Parliament.
Mukherjee said he had taken the risk as he felt that the priority would be to return to higher growth rate. But he assured that the deficit is still manageable.
“With the growing aspirations of people, you cannot adhere to a strict monetary policy,” he quipped.
He also pointed out that India’s fiscal deficit – 6.8 percent- situation was much better compared that of the US and Britain.
“I think the fiscal deficit in the US for this year is more than 11 percent and in the UK, it’s more than 16 percent. Compared to that, our 6.8 percent is better.”
Mukherjee said his goal was to achieve at least 6 percent growth in the current fiscal and bring the economy back to the high growth trajectory in coming years.
“Today, India is on the regular path of high growth. Of course, there has been a dip this year and next year I do hope we will make up some, but another year we will come back to nine percent growth because basic fundamentals are strong and resilient,” he said.
Although confident, Mukherjee was not game for any euphoria about recession nearing its end, saying, “The turnaround in the economy will be visible only by the third quarter of this fiscal, but that also if there’s a visibly change in the international scenario… otherwise it may take a bit longer.”
“My priority is to come back to the path of high growth rate,” the FM said, adding that enough stimuli to growth have been provided.
He also was confident that increased spending in infrastructure will push growth.
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Appearing intrigued by the thumbs down given by the markets to his budget – the Sensex crashed by over 700 points – Pranab said that he doesn’t understand why the markets reacted negatively.
Then in a more self analysing tone added, “Too many expectations were built up by the markets…in expectations you forget reality. The markets expected the FM do much in one go.”
Taking the point forward he added that the budget has given a broad vision and has to be followed.
“Budget not the only forum to redress grievances,” he retorted.
On direct taxes, Pranab said that he is a votary of real reforms in direct taxes.
“I would do away with plethora of exemptions, and make tax laws simple. Rate of taxes will be low and voluntary submissions will be encouraged,” he said.
Regarding the expectations that the government would announce new disinvestment targets, the FM made it clear that it was not possible to set a disinvestment target.
“As and when it will take place, the govt will increase the disinvestment target,” he said.
Pranab, importantly, added that the disinvestment will only be done with people’s participation.
-Agencies