Fiscal deficit ceiling needs fresh look: Pranab Mukherjee

May 26th, 2009 - 5:26 pm ICT by IANS  

New Delhi, May 26 (IANS) Accepting that the two financial stimulus packages and a relaxed monetary policy have put pressures on India’s fiscal deficit, Finance Minister Pranab Mukherjee Tuesday hinted the fiscal deficit ceiling could be raised, saying it neded a “fresh look”.
In an interview to a television channel, Mukherjee said monetary measures such as cuts in lending rates have been taken to ensure increased liquidity in the system, but admitted the move had led to the fiscal deficit swelling.

“We have crossed the ceiling on fiscal deficit and have to take a fresh look at it,” Mukherjee said to broadcaster CNBC TV18.

According to him, the full impact of the fiscal measures was yet to be realised as the government couldn’t implement new policies between March and May on account of the electoral code of conduct. “However, things have started looking up and we will see a growth in the region of 7 percent in 2009,” he said.

Mukherjee, who headed the external affairs ministry in the outgoing United Progressive Alliance (UPA) government and has served as the country’s finance minister between 1982 and 1984, will present the national budget in the first week of July.

The finance minister refused to indicate what his budget proposals would include, but said that in his new term as the finance minister, he would address issues relating to the ‘Aam Aadmi’ (masses), who would remain the “focal point” of the UPA government.

In this connection, Mukherjee referred to the National Rural Employment Guarantee Act (NREGA) aimed at creating work and increasing incomes of households in the hinterland.

“NREGA ensured job security through an act of law. We have to look at ensuring food security also,” the minister said.

At the same time, Mukherjee emphasised, he would accord “adequate attention to infrastructure development”.

“For infrastructure development I would like to move at a faster rate (as compared to the last five years) and public-private partnership in this sphere is an important mechanism for development.”

Mukherjee also rubbished speculation that the UPA, now shorn of the baggage of Left’s untenable support, was toying with the idea of reviving the disinvestment ministry, now reduced to a department under the finance ministry.

“It’s plain media speculation,” Mukherjee said.

As for the delay in the formation of the cabinet, he said it was not because of any politically influenced reason, but because the prime minister was still considering suitable candidates for the portfolios.

“Many considerations for selection of personnel and distribution (of portfolios) have to be taken care of like sectoral and state representation among other things like experience,” Mukherjee argued.

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