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Will talk banks into "a more benign plan of action" on interest rates



Author : Nivedita Mookerji/DNA


Pushing reform measures while initiating steps to boost inclusive growth and ensuring economic revival amidst the continuing global financial crisis, while maintaining fiscal prudence, are top on the UPA-ledgovernment's agenda. Investment thrust for the infrastructure sector is also a high-priority item.


The Union Budget, scheduled for the first week of July, is likely to reflect all this.


But much before the Budget, finance minister Pranab Mukherjee will meet bankers, in early June, to get them "committed to a more benign plan of action." A round of interest rate reductions could well follow.


In his first press conference since being appointed the finance minister, Mukherjee lamented that while much has been done in the last eight months and international capital flows have resumed, the cost and speed with which finance can be accessed remains a matter of concern.


"We need to seize the opportunity presented by the current circumstances for pushing long-pending reform measures," he said.


The finance minister then added, "I have no hesitation in saying that along with reviving the momentum of growth and employment creation, our government will strengthen the various inclusive elements in the coming Budget."


The election results have vindicated the strategy of inclusive growth, he said and also spoke of the widespread feel good sentiment after the election result, and that the government needs to rapidly build on that with concrete steps.


Specifically on reforms, the finance minister said such measures would make the economy more competitive and the economic regulatory system more efficient, quick and responsive to global developments.


Mukherjee is back as the finance minister after over 25 years, not taking into account his short stint earlier this year.


The veteran Congressman linked the proposed economic reforms with the economic stimulus. Sustained stimulus to growth can be harnessed by the next round of economic reforms, he said, adding, the government had in mind a broad plan of action.


Asked what the reform plans would be, the minister said, "I can't spell out the action plan. Reform is a continuing process, and can't be a stop and go."


In an indication of what the Finance Bill could contain, the finance minister spoke about the "opportunity to present its (the government's) vision and approach for the next five years in the forthcoming Budget."


Following the pre-budget consultations, he said he wants to prepare a roadmap for concrete short-term and medium-term vision for economic growth.


On the government's stand on disinvestment, Mukherjee refused to give out specifics. To a question on how large a role the Disinvestment Department would have in the coming years, he laughed and said, "I would like to remain silent."


Stating that the government was committed to the process of fiscal consolidation over 2-3 years, Mukherjee expressed concern over the "prophets of doom" who have been focusing on the increased public spending and consequent increase in the revenue and fiscal deficit.


He pointed out that restoration of growth and employment would not have been possible without increased spending funded by incremental borrowing. The current financial year would also witness a similar pattern (of increased public spending).


As for infrastructure, the government would focus on increasing investments. Mukherjee promised to make the pipeline of infrastructure projects more robust. Where necessary, policy and procedure will be calibrated to give a boost to infrastructure spending, he said.


Among other things, he said the Prevention of Money Laundering Act Amendment, which was passed by the Parliament recently, would be brought into force soon.



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