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| Economy still needs stimulus: FM |
| Press Trust of India / New Delhi Mar 03, 2010, 20:37 IST |
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Finance Minister Pranab Mukherjee today said the ongoing economic recovery is still not broad-based and depends on stimulus measures, even as the Budget has partially rolled back these steps.
"Recovery continues to be driven by government stimulus spending, and is not completely broad-based," Mukherjee told a CII function here today.
Budget 2011 raised excise duty by 2 per cent to 10 per cent, to partially rollback stimulus measures. The government had cut excise duty by 6 per cent, besides service tax by 2 per cent to provide stimulus to the economy hit by the global financial crisis.
The Finance Minister said his objective is not to withdraw the stimulus measures fully until the fruits of economic growth is spread to all sectors of the economy and to all sections of society.
"It is his intention to facilitate the spread of growth into all sectors of the economy and all sections of society...Therefore, I have placed growth at the centre of the Budget," Mukherjee said, adding "the rollback of stimulus has only been partly carried out in the matter of excise duty by 2 per cent which is still lower than the pre-stimulus rate."
Economic growth has slipped to 6 per cent in the third quarter of this fiscal from 7.9 per cent in the preceding three months.
The Finance Minister exuded confidence that in the fourth quarter, economic growth will pick up again. He also expressed optimism that the economy will clock 8-8.5 per cent growth next fiscal.
"I am confident that we will be able to achieve 8-8.5 per cent (growth) in 2010-11 and the Budget is predicted on that assumption," the Finance Minister Mukherjee said.
He said economic growth can spread to all sections of society with more effective delivery of public services, which has long constrained the full benefits of resources expanded.
"Given this scenario, it was my endeavour to keep the fiscal deficit at an acceptable level. Budget 2010-11 lays down a clear direction for the movement of the fiscal deficit in future years, and should provide considerable comfort to investors," he said.
Mukherjee said with partial rollback of stimulus, fiscal deficit is budgeted to be 5.5 per cent of GDP during 2010-11 against revised estimates of 6.7 per cent for the current fiscal.
"In this Budget, on the one hand, I have introduced tax reforms which form part of a bigger tax reform strategy and on the other hand I have allocated required resources for priority sector to ensure growth with inclusiveness. I hope that this Budget will help consolidate the gains from the recovery process," he said.
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