The Hindu Business Line : Govt confident of economy bouncing back next fiscal

New Delhi, Dec. 18 The economy would bounce back in the second half of the next fiscal year and the stimulus measures announced a couple of days ago would help bolster growth and ensure “brisk” economic activities in the remaining part of this fiscal, the former Union Finance Minister and Home Minister, Mr P. Chidambaram, said in the Lok Sabha on Thursday.

Replying to a special discussion on the review of the economic situation raised by CPI(M) members Mr. Basudev Acharya and Mr P. Karunakaran, Mr. Chidambaram said that the first half growth of the economy at 7.8 per cent and the likely slowdown in the second half would still make India’s GDP growth at 7 per cent this fiscal. He said India would be the second largest growing economy in the world.

The focus of the UPA Government was on “faster and more inclusive” growth and “this boat will sail and deliver” results to the poor despite the economic slowdown. He said the government is open to taking more steps to counter slowdown in the economy.

Reeling out statistics to contrast the performance of the UPA with that of its predecessor NDA, Mr. Chidambaram contended that on all important parameters like high economic growth, reduction of fiscal and revenue deficits and ensuring higher tax revenues, the UPA Government record was far better than the NDA to enable it to spend on “well-directed social programmes” like loan waiver for farmers, mid-day meals schemes, rural development, national rural guarantee employment programme to help uplift the rural and urban poor.

Both monetary and fiscal policy measures were put in place and the Prime Minister, Dr. Manmohan Singh, and himself had been “prevailing upon” banks to ensure credit flow at affordable rates to all the “productive segments” of the economy so that the “economic engine” of agriculture, small and medium industries and large scale industries would keep the wheels of the economy moving. Some structural issues could not be resolved faster.

He also rejected the criticism that iron ore export duty cut would help only in exporting raw material and not finished steel stating that steel prices had come down because of decline in demand.

Responding to criticism that the Government was trying to bring down its stake in nationalised banks, Mr. Chidambaram, responding on behalf of the Prime Minister to the debate, said that “on the contrary the Government has been recapitalising banks”.

He pointed out that while the capital adequacy norms were only 8 and 9 per cent, Indian banks have been preparing themselves for 12 per cent capital adequacy norms to insure themselves against any risk in their business. The government’s equity in SBI would not be lowered below 51 per cent as it has been so mandated by an Act of Parliament, Mr Chidambaram added.