FM speaks: Growth

Kolkata: Finance Minister Pranab Mukherjee on Wednesday said the country’s economy would grow over 6 per cent this fiscal and that the government planned to scale down fiscal deficit to 4 per cent by 2012.

“During the first quarter, the GDP (gross domestic product) grew by 6.1 per cent and we expect it to grow a little better in the second quarter. Growth will be higher in the third and fourth quarters,” Mukherjee said.

On the ballooning fiscal deficit, he said the government would try to bring it down to 5 per cent in 2011 and 4 per cent by 2012, he said in an address at the 155th annual general meeting of the Bengal Chamber of Commerce and Industry here.

Fiscal deficit is projected to be around 6.8 per cent in 2009-10.

Asked how he proposed to bring down the deficit, Mukherjee said there would be no requirement for stimulus packages once the global economic situation looked up, which would help in “revenue upswing”.

“During the budget, we took a tremendous risk by raising development outlay by 39 percent knowing fully well the resulting fiscal deficit was not sustainable,” the finance minister said.

Referring to the additional outgo on account of the Sixth Pay Commission recommendations, he added, “The level of expenditure will be much higher than normal expenditure. Due to the fiscal concession there has been a revenue shortfall.”

Talking about stimulus packages, Mukherjee said, “There was a proposal in the G20 finance ministers’ meeting to work out the exit strategy for stimulus packages given to all nations.

“But we are not recommending exit strategy right now. We should wait till the recovery of the world economy for exit strategy.”

Mukherjee said the erratic monsoon took its toll on the country’s agricultural produce. “There is a shortfall of kharif crop by 14-15 million tonnes.”

He, however, said the new wheat and rice season was beginning with a comfortable surplus.

“If needed we will import food, but without any announcements as that tend to impact global prices,” the finance minister said.

He also said in his speech that the exports sector has received a jolt due to the economic slowdown.

The exports sector is unlikely to be back on the growth track unless the advanced economies like North America and Europe revive faster, Mukherjee said.

“Around 62-66 per cent of the country’s export goes to Europe, North America and Japan.”