Budget to address slippages in economy: Pranab
"As I set about preparing the Union Budget for the next year, I have to take stock of the developments in the past months and find ways to address the slippages, the gaps and building on outcomes that need to be consolidated in the ensuing years," he said at 84th annual general meeting of Federation of Indian Chambers of Commerce and industry (FICCI) here. Warning that the months ahead are difficult, he said the growth rate could fall below 7.5 per cent in the current financial year from 8.5 per cent a year ago.
"We have difficult last quarter ahead of us in this fiscal year. Our growth for 2011-12 may be around 7.5 per cent or less…I must confess, at this point in the year, I find myself in much the same situation," he said. There are also concerns on the central government finances for the current fiscal, he said, adding, performance during the first half on the fiscal front poses some risks in both receipts as well as expenditure estimates.
"Adhering to the fiscal deficit target of 4.6 per cent of GDP in 2011-12 is a major challenge," he said. The government proposes to bring down the fiscal deficit in the current fiscal to 4.6 per cent of the GDP from 4.7 per cent a year ago. However, the surge in subsidy bill and poor realisation from disinvestment has made the task difficult.
According to official estimates, the subsidy bill of the government is likely to exceed Budget projections by about Rs 1 lakh crore during 2011-12. As far as disinvestment is concerned, the government has been able to mop up just around Rs 1,100 crore against a target of Rs 40,000 crore.
Claiming that India`s growth fundamentals are strong, Mukherjee said they look more attractive in a world challenged by problems of confidence and lack of growth. "Despite the challenges before us, I am confident that we will improve our short-term growth prospects in the coming months," he said.
"India`s robust performance in difficult times shows that we could actually come out stronger from the crisis," he said. There are some clear signs of inflation moderating in the coming months, he said, adding, "I expect it to be in the range of 6-7 per cent in end-March, 2012". Industrial production is also showing signs of a pick-up. While the services sector has retained its growth momentum, agriculture sector expansion despite high base year production is likely to provide a buffer for the moderation in growth rate in the current fiscal year, he added.
He, however, said "We have to be alert to shape the required policy responses, reform systems and improve the regulatory framework of our institutions to make the most of the opportunities coming our ways". Referring to global economic situation, Mukherjee said, what is more disturbing is that even the global policy makers are finding themselves at loss because all the conventional instrumentality available at their disposal are showing their limitations and weakness to address the major issues. "International Monetary Fund almost ritually is revising its numbers and fixing the new target. So much is the level of uncertainty. The complex mix of financial and real sector problem is thwarting a fuller recovery," he added.