Fresh economic stimulus if required: Pranab

February 19th, 2009 - 2:51 pm ICT by IANS  

New Delhi, Feb 19 (IANS) The government is open to a fresh economic package if it was required to cope with the global financial crisis, acting finance minister Pranab Mukherjee said Thursday, but cautioned against pressing the panic button as the full impact of the meltdown on India was yet to be gauged.
“After consulting the RBI (Reserve Bank of India), I am not making any commitment, if the situation requires, we may be in a position to do more,” Mukherjee said during question hour in the Rajya Sabha.

In this context, he noted that there were “constitutional constraints” on the government against taking any “radical measures” in the interim budget for fiscal 2009-10 he presented Monday.

“It is for the new government (that will take office after the April-May general elections), whether it is it our party or theirs, to take the required measures, but if the situation demands, we can still do something,” Mukherjee said.

“The problem is complex, the situation is difficult but there is no need to press the panic button,” he added, alluding to what former finance minister and now home minister P. Chidambaram has often said in the past: that the Indian economy is nowhere near recession, which is indicated by two successive quarters of negative growth.

“Our growth rate has reduced from 9 percent. The CSO’s (Central Statistical Organistion) latest figures put it at 7 percent. The RBI has revised the target to 5.5 percent. Perhaps this is why the impact (of the global meltdown) has been marginal up to now. As the situation unfolds, I don’t know how much time it will take to gauge the full impact (of the slowdown on India),” Mukherjee contended.

Noting that the growth in exports had reduced from 26 percent to 17 percent, the minister added: “The full impact (of the crisis) is yet to be assessed.”

At the same time, Mukherjee shot down a suggestion from industrialist Rahul Bajaj (Independent) to go slow on “external liberalisation” by delaying the planned free trade agreement (FTA) with ASEAN “for at least a year”.

“All measures to boost the economy will be taken. As for the FTAs, these are at the negotiation stage. These things take time. We should not give out the wrong signals right now,” Mukherjee maintained.

Responding to a supplementary on the drop in foreign currency remittances by Indian workers who had lost their jobs abroad due to the recession, Mukherjee said: “The availability of foreign exchange reserves need not be a matter of worry. We have to see how to utilise the returning workforce.”

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