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Fiscal order must be restored: Pranab
May, 25th 2009

In an exclusive interview to TOI, finance minister Pranab Mukherjee said the government had accorded the highest priority to getting the economy kicking. The government speaks through the President. When she addresses the joint sitting of Parliament on June 4, you will have the first indications of what is being planned in terms of policy and legislation, he said.

The minister said the economic survey and the Budget will be occasions for the government to put forward its plans for the year 2009-10. He said the Budget would be presented to the House in time.

He said he had previously stated that the states had room to increase spending by 0.5% of GDP. This is beginning to happen. The election process interrupted certain initiatives which will now get underway. For example, we thought of adding 1,400 buses to public transport fleets but the code of conduct kicked in, he said. He pointed to the mantra of inclusive growth seen to have been endorsed by poll results that was at heart of the governments economic thinking.

He outlined the governments view that domestic demand must be propped up by spending in infrastructure despite fiscal deficits going beyond norms. All over the world there has been a loosening of fiscal discipline. This was deemed to be necessary. But we shall have to come back to the path of fiscal order, he said while saying that though indirect tax collections had dipped, this was not the case with direct taxes.

Explaining the exigencies of the situation resulting from the slowdown, Mukherjee, who presented the interim budget in February, said, I had to go in for revenue sacrifices. There was no question of new taxes while subsidies are essential to protect the common man when crude prices jump from $37 to $147 a barrel, you simply cannot pass it on.

He said the government had done well to cope with the downturn. There are fiscal and monetary measures taken by the RBI to ensure liquidity in the system, he said.

 
 
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