Prime Minister Manmohan Singh has already indicated that his government would unveil a slew of measures to combat the economic downturn if they returned to power. External Affairs Minister Pranab Mukherjee, who also has the additional responsibility of finance, shared some of his ideas with Business Standard recently about how these would take shape while campaigning in his own constituency of Jangipur in West Bengal.
How would your government, if returned to power, tackle the economic downturn?
Already we have taken three-fold measures. We have revised the monetary policy, cut down on the repo rate, SLR and CLR. On April 21, the Reserve Bank of India (RBI) governor announced a new credit policy. Even after that we have further lowered the interest by.5 per cent. Now, we would like to see that banks lower their lending rate further.
Any other measures?
We have already injected Rs 60,000 crore first and then Rs 40,000 crore into the system. Its impact would be felt from June or July. It would have impacted earlier, but because of the election days, it got delayed. The third measure we took was to ignore the fiscal deficit and the revenue deficit. Thus, states now can inject another Rs 35,000 crore into the system without bothering for the restriction on taking overdraft from the RBI.
How would all these generate economic activities?
All these funds made available by us to banks and state governments should go into building rural infrastructure. That means we should concentrate our energy on building roads, bridges, food parks and other similar projects. These will definitely generate jobs at the grassroots level, which in turn will generate demand for consumer goods. Thus, industry will get its due incentive to increase production.
Do you think the government would be able to mobilise enough resources to attend to the problem?
Much criticism had been made of this by the Left. Because of this growth in GDP in the last five years from 5.6 to 8.6 per cent, the ratio of tax and GDP had grown from 8 to 11.5 per cent.
Due to this, the central government was in a position to allocate Rs 65,000 crore to waive loan to the farmers, Rs 31,000 crore to the NREG scheme and Rs 26,000 crore as bank loan to students to pursue higher education to cite a few examples. The states are getting a higher amount of fund as their share of the tax by giving them more leeway to manage their expenditure side without bothering to take overdraft from the RBI.
