FM calls for legislation on deficit

Fiscal discipline is most important and this is an area where "we have not succeeded in creating a consensus on fiscal reforms," he said at an Assocham (Associated Chambers of Commerce and Industry) seminar on a new electoral agenda.

Sinha said the Reserve Bank of India (RBI) has the authority to decide on issue of lowering the interest rates. "I am not venturing an opinion because to decide on interest rates is the domain of the RBI. I leave itto the judgement of the Governor of the RBI," he said.

Industry has called for a cut in interest rates in view of the low prevailing rate of inflation. The wholesale price index was low at 1.85 per cent in the weak ended July 10, which is only a little above the 1.83 per cent in the previous week. This is the lowest rate of inflation in about 17 years.

He, however, maintained there was political consensus on the broad direction of economic reforms since the process started in 1991 and attributed the sustained economic growth in this decade to the distancing of politics from economics. This was the reason that despite political instability, the country has moved forward on the economic front, he added.

But Congress leader Pranab Mukherjee disputed the claims of Sinha saying political instability in the last three years did affect the economy despite a political consensus on economic reforms.

"I am not a fiscal extremist or a fiscal terrorist and neither I am following a IMF mantra”, Sinha said addingthe new government at the centre should make it its agenda to prevail upon the state governments to help in arresting fiscal deficit.

Sinha said there was need for patience amongst the people on passing of various legislations in Parliament and said a minor delay in its clearance would not affect the economy.

Though quick elections could impact economic development, the trade and industry during the last few years has managed to give a momentum to growth due to the liberalisation process which obviates the need to seek government intervention on all issues, he said.

Sinha called for building of an infrastructure of international standards to accelerate the gross domestic product (GDP) growth rate. He attributed the current turnaround of the economy to the pick up in rural demand as a result of the high agricultural growth in the country.