We are not sitting idle: Pranab

EYE ON MINT STREET: FM hopes RBI ‘adjusts’ monetary policy as govt is ‘adjusting’ fiscal policy

Written by ENS Economic Bureau | Mumbai | Published: June 17, 2012 12:44 am

The United Progressive Alliance’s Presidential nominee and Union Finance Minister Pranab Mukherjee on Saturday,in a strong message to critics,said that the government was taking steps to address the concerns raised by various quarters on the economy and indicated that the Reserve Bank of India would “adjust the monetary policy” just as the government was “adjusting the fiscal policy.”

“The RBI is one of the most respected monetary authorities of the world… I am confident the RBI will adjust the monetary policy as we are adjusting fiscal policy. Yes we shall have to reduce our subsidy. It must be below 2 per cent of the GDP. We have to improve the delivery system. We are taking steps. We’re not sitting idle,” the Finance Minister said at an Assocham conference here.

“As Finance Minister,I can’t ignore the ground realities… and apprehensions expressed by captains of industry and credit rating agencies. I can’t dismiss their concerns and I take serious note of them… and try to find out what needs to be done. That’s the exercise we have done in all the three years,” he said.

The government,he said,is taking fiscal measures to ensure that the central finances remain strong in wake of “difficult times” and expects the RBI to take monetary steps. “Supply constraints will have to be removed,” he said.

Mukherjee listed slow growth,high fiscal and current account deficits,inflation and negative sentiments as challenges facing the economy.

“There’re difficulties. We can’t ignore those difficulties. Yes,there’s slow growth,high deficit… which is a cause for concern. Inflationary pressures are still there. There’s a negative sentiment in respect of investments. We have to take note of all these areas of difficulties. We shall have to find out our own solutions in our own way. I believe our economy and industry have that resilience,” he said. Expressing optimism about a comeback to high growth,he said,“I want to convey one message. That message is clear and loud: We’re in a difficult situation. But that doesn’t mean that we can’t convert these disadvantage into advantage.

Mukherjee said he has written to chief ministers to consider temporarily lowering of duties on petroleum products.

“I have suggested to them (states) if you agree to reduce the tax burden temporarily,say till crude prices come to $ 90,the Union government is ready to reduce. I have written to Chief Ministers. It will provide relief to consumers. When the situation is difficult,burden has to be shared by all stakeholders,it should not be passed on to only one stakeholder,” he said.

On the euro zone issue,he said,“I am aware of the fact there has been devaluation of the rupee and uncertainty about the currency. This is closely linked to the euro zone crisis. I am equally concerned like many others on what’s going to happen on June 17… whether Greece will remain in eurozone.”

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