Gandhian economics can help overcome crisis: Mukherjee (Lead)February 6th, 2009 - 4:11 pm ICT by IANS
New Delhi, Feb 6 (IANS) With the outlook for next fiscal appearing “more downbeat”, the government will initiate more measures to support labour intensive sectors with focus on Gandhian economics even as the Indian economy will grow 7 percent this fiscal, External Affairs Minister Pranab Mukherjee said Friday.”When necessary, the government will take further steps to ensure that labour intensive sectors are less adversely affected,” Mukherjee, who also holds the finance portfolio, told a seminar organised by a leading think tank here.
“After an average 9 percent growth in the last five years, we expect the economy to grow at 7 percent in the current fiscal despite the global economic downturn,” he told the silver jubilee conference of the Research and Information System for Developing Countries (RIS).
“As the next year’s outlook is more downbeat, the government has taken a number of measures to inject liquidity, bring down the cost of borrowing and stimulate demand through fiscal measures,” he said.
Speaking to reporters later on the margins of the conference, Mukherjee said it was not decided yet as to when some of the measures will be announced. “You will have to wait till I present the budget,” he said.
The interim budget is due Feb 16 and Home Minister P. Chidambaram, the finance minister till a couple of months ago, had Thursday said the government would be within its rights to announce new measures, despite ensuing elections.
Mukherjee said global financial institutions needed to put more resources into developing nations, specially in rural areas, skill development, infrastructure and to strengthen local communities.
“To me, there is a necessity, once again, to revisit Gandhian economics with its emphasis on rural self-help and sustainable economic development. Anything contrary would be disastrous,” he said.
“It should be a veritable Marshal Plan for the economic uplift of the poorest sections of societies world-wide.”
The senior minister, who is virtually governing the country with Prime Minister Manmohan Singh convalescing after a heart surgery, said he did not subscribe to the thesis that high savings rate in Asia fuelled the current economic crisis.
“The current financial crisis had its origins in the sub-prime lending sector in the United States and witnessed the collapse of the banking system in the West.”
He said the main reason for the crisis was the fall in US savings from around 10 percent of the disposable income in the 1970s to 1 percent after 2005.
“The current circumstances make it imperative for the developing countries to enhance regional cooperation to mitigate the adverse impact of this crisis. We have the capability to do so and we need to be creative in our cooperation.”
According to Mukherjee, developing countries may well account for more than 50 percent of the world income in a decade or so and over 50 percent of the global trade, savings, investment, labour force and capital.
Quoting the US National Intelligence Council, he said China and India were set to achieve near parity with the US in two areas in 10 years: Scientific and human capital in India and government receptivity to business innovation in China.
“We in Asia have the capacity to undertake significant contra-cyclical steps to drive the economy forward on the strength of the domestic demand by investing more on infrastructure, on labour intensive sectors and on the improvement of the social safety net.”