Government will spend Rs.250 bn to pump-prime economy: Kamal NathNovember 9th, 2008 - 12:02 pm ICT by IANS
New Delhi, Nov 9 (IANS) The government will pump-prime the economy by investing Rs.250 billion (Rs.25,000 crore) in areas like infrastructure but without worsening the country’s fiscal deficit situation, Commerce Minister Kamal Nath has said.”We will definitely have to pump in close to Rs.10,000 crore (Rs.10 billion) on an annual basis in definitive projects. In the power sector, Rs.1,000 crore; in roads, Rs.1,000 crore,” the minister said.
“Totally, I think, we would need to pump in Rs.25,000 crore in the next six months to keep this oiled, to keep the machine moving,” Kamal Nath told CNN-IBN’s “Devil’s Advocate” programme.
The minister also said that the government would continue to remain cautious in printing currency notes, so as not to add to the fiscal deficit while making the huge investment. Funds will be found by reallocating revenues.
“So it’s going to happen within the confines of good financial management.”
Speaking about the current turmoil in the global financial system, Kamal Nath said while companies will not have to live with lower profits, the situation was bound to change in the near future.
“We must recognise: In the last four years, companies have made 50-60 percent profits. In the West and in the other parts of the world they are struggling with 5-10 percent profits,” he said.
“So if these profits are coming (down) to 30 percent, Indian industry must live with these 30 percent profits. You cannot have those huge profits forever,” he said.
“I don’t believe that this gloom, which has settled in the West, is permanent. It is transitory. Let’s face it, let’s address it, and move on.”
When interviewer Karan Thapar asked for the minister’s comment on tiny, small and medium industries - the backbone of Indian industry - being under enormous pressure, the minister promised to help them tide over the crisis.
“The small and medium sectors have been helped by the appreciation of the dollar and depreciation of the rupee. So, that is the one benefit they have got. We are looking at other benefits where we can give them some sops,” he said.
The minister also maintained that India’s services sector will continue to play a major role in expanding the gross domestic product (GDP) despite the country facing a major gloom.
“Services will have its role in our growth,” Kamal Nath said, adding that he believed they could still grow at double-digit levels. “They will achieve it. They are achieving it. There has been no slowdown,” he said.
“We are on track to achieve 7.5 (percent growth) and excess of 7.5 (percent) this year,” Kamal Nath added.