Union finance minister PRANAB MUKHERJEE says developing countries must have more say in decision-making at global economic fora and the priority at home is to ensure high economic growth, with equity. Edited excerpts from an interview with Govindraj Ethiraj, Editor-in-Chief, Bloomberg UTV:
We are now a key member of G20, responsible for determining the global economic future. How do all these stack up for Indian citizens?
India is an important player in the global economic scenario. The fortitude with which we faced the international financial crisis and our prompt action were appreciated. The first two stimulus packages in December and this January and thereafter, followed by the third package in the interim budget, provided not only stimulus but ensured growth at 6.7 per cent last fiscal. It earned respect for India's economic strength and viability.
Emerging markets like India, Brazil, Russia, China and South Africa contribute substantially to the world economy. Naturally, our demand is to have a larger voice in the decision-making process. We emphasised at the level of the summit leaders that the 3 per cent capital enhancement recommended in the World Bank has to ultimately reach 6 per cent, and come substantially to the developing economies.
Similarly, in the case of IMF, the increase in quota should be 7 per cent. Finance ministers of Brazil, India, Russia and China met a day earlier and we decided to take a common position.
Till now, the IMF mandate was to maintain currency management and engage itself in monetary policy. We suggested another role, to provide financial stability to the global economy.
Does India need as many stimulus packages as we rolled out?
We had certain objectives. The immediate one was arresting the slowing of growth. We could retain our GDP growth at 6.7 per cent. For the current fiscal year, we have registered around 6.1 per cent in the first quarter. I do hope that this year it will be possible to have a 6 or 6-plus per cent GDP growth. The time to exit or continue the stimulus packages is constantly under review.
Most of India and India Inc is asking when we are going back to 9 per cent.
I am also determined to come back to 9 per cent. But it may take a year or more. My immediate task is to ensure positive growth. We will have to take care of inflation. And, we want growth with creation of jobs, with equity. It must have its impact on the aam admi.
Although there has been some adverse impact of drought on manufacturing, industrial activity has started picking up. Exports, though, on a year-on-year basis, are still going down. But month-on-month, there is a slight improvement. These are positive signals. But it will gather momentum only in a couple of months.
People ask where the next 100 million jobs will come from.
From different sectors. We are emphasising on an agricultural growth of 4.5 per cent to achieve a 9 per cent GDP growth. It is crucial and we want to ensure that the services sector will generate jobs. So will massive rural development. Sectors like IT will also recover and flourish with the recovery of the world economy.
How do you see NREGA over a period of time?
It has generated demand and it has helped industry, because the demand for consumer goods have stepped up. It gave people jobs and money. Nobody remains idle. From that point of view, it has served its purpose. Second, it created assets in rural areas. Some mismatches are there and we are plugging it. Where the delivery system is better, there are real beneficiaries.
The fiscal deficit is at 6.8 per cent of the GDP. Is there something the government is going to do which would bring this number to a more manageable one?
I have stated that this fiscal deficit is unsustainable. Next year, it is going to be 5.5 per cent and it must be brought back to 4 per cent by 2012.
What about disinvestment?
As and when we take decisions, you will come to know, as with Oil India and NHPC. The responses have been very good and the value of the companies has increased after disinvestment. You cannot take an ideological or theoretical position. Some public sector companies are doing well while some are not. What is needed is efficiency, competency, professionalism, capability of delivering goods, and accountability.
The (draft) direct tax code came at a rapid speed. What responses are you getting?
Of 1,000 responses on our website, 78 per cent are satisfactory to excellent. My approach and objective is very clear. We have placed the documents for discussions and for inviting inputs from various stakeholders. And we are open- minded. My people are having interactions with various stakeholders and collecting inputs.
When framing policies, who is the Indian that comes to your mind?
Of course, aam aadmi. I have to think of what benefits he will have. Sometimes we cannot come to that level and that is our shortfall.
You think people fail to understand that?
No, I’m not criticising. It depends on the level of perception and understanding. Sometimes, the same things might be ahead of time or not understood well. Take the case of portfolio investment of NRIs. During my first tenure as FM when I introduced it, I received all criticism. But when almost the same policy was introduced in the 1990s, the country was ready to accept it. That’s why I say never judge policy from the perspective of theory, but from the effectiveness in implementation.
