Economy starts moving slightly, says Pranab

The economy has started moving upward on two stimulus packages in the last fiscal, but scanty rainfall this year may play spoilsport, the government told the Lok Sabha today.

“The economy has started moving slightly, but I still am not quite sure because other problems may come from adverse impact of scanty rainfall,” Finance Minister Pranab Mukherjee said during Question Hour.

“My colleague, the agriculture minister (Sharad Pawar) is making the assessment. We are also making the assessment, but this is a problem and it is a reality and we are trying to handle it,” he said, replying to a question on slowdown of credit between September 2008 and June 2009.

When the industrial crisis engulfed developed countries and the financial meltdown became a major financial crisis all over the world, it had its worst impact, the minister said adding that credit is required for investment, for carrying businesses and using it for productive purposes.

He said these activities were coming down during the crisis period. A number of steps have been taken by the government like two stimulus packages in December last year and January this year, he said adding that the movement of economy was not just like “switch off or switch on”.

“Even if we take action today by adjusting the credit policy, it will take some more time to get its full impact on the overall economy,” Mukherjee said.

Mukherjee said the main reason for deceleration of credit growth was sharp slowdown in growth of the economy during the latter half of 2008-09, with both the industry and export sector recording decline for several months.