Concerned over slowdown, Finance Minister Pranab Mukherjee on Tuesday said the government will make efforts to build broad consensus on reforms, as the economy has resilience to overcome the problem. He said questions have been raised on whether the economy is going to be derailed in the wake of IIP figures turning negative and overall growth slowing.
“We have the capacity and resilience to overcome the crisis,” he said, winding up a debate on the Appropriation Bill in the Rajya Sabha. Industrial production declined by 5.1 per cent in October, while the rupee crossed an all-time low of Rs 53 to a dollar. The House later returned the Bill, granting parliamentary approval for extra expenditure of Rs 63,180 crore for the current financial year. The finance minister said for the economy to recover, it has to be demonstrated that Parliament and other institutions could function without disturbance.
He expressed disappointment over frequent disruptions in Parliament. “Let us not institutionalise instability in Parliament”, he said, adding coalition governments had become stable since 2000.
Against the backdrop of a difficult economic situation, he said political parties had to demonstrate that Parliament and other institutions function.
Doing so would impact the government and confidence will return in the economy. On its part, he said, “The government will not be found lacking in building consensus on broad economic policies.”
Denying a perception that there is paralysis in decision making process, he said, “It is not so.”
The government, he said, has taken a number of decisions which include national manufacturing policy, incentives to small industries and package to debt-ridden handloom weavers.
As many as 73,000 villages will be brought into banking network with the help of technology by March 31, Mukherjee said, adding “actions are being taken... Sometimes there may be some set backs... Running coalition is not an easy job.”
He also said the Congress party has limited mandate making it imperative that consensus building was required. Referring to rising expenditure, Mukherjee said it was mainly on account of increased outgo towards fuel, fertiliser and food subsidy.
He said crude oil prices in the international market has gone up to $107-110 per barrel from $90 at the time of formulation of the proposals for the 2011-12 budget.
Mukherjee had earlier said the total subsidy bill was likely to exceed by about Rs 1 lakh crore in the current financial year. He said the government, despite rise in procurement prices, had refrained from raising price of foodgrains at ration shops since 2001.
Moreover, he said, the government had to provide additional funds for ICDS programme and higher pension for defence personnel. The total additional allocation (including first and second batch of supplementary demands for grants) over and above what was provided in the budget would be 5.6 per cent of the proposed expenditure, he said, adding the figure was not high when compared with allocations made in earlier budgets.
As regards the international crisis, he hoped world leaders would put in place a mechanism to prevent the crisis from spreading to bigger countries. If the crisis spread to larger economies, “no amount of stimulus infused in economy can prevent the world economy from coming under recession,” he added.
