Financial condition does not permit rollback: FM

The government today sent across a strong signal that it was not considering any rollback in the recent increase in auto fuel prices despite inflationary concerns. It said the Budget 2010-11 had not raised the tax rates but merely rolled back the stimulus partially.

In his reply to the debate on the General Budget in the Lok Sabha, Finance Minister Pranab Mukherjee affirmed: “The financial condition (of the economy) does not permit me (to announce any rollback). Therefore, excuse me.” The strong message prompted the Opposition, led by the Bharatiya Janata Party and the Left parties, to walk out of the House. The Opposition had walked out even during the Budget speech on February 26, when the finance minister announced levying an excise duty of Re 1 a litre on petrol and diesel.

Mukherjee was responding to former finance minister and BJP leader Yashwant Sinha’s interjection seeking a response on the Opposition demand for a rollback of auto fuel prices. “I did not impose a single new tax. Certain tax were rolled back (cut)…We have simply rolled back a part of the cut,” he said earlier in his reply speech.

After the Opposition walkout, the Lok Sabha, or the lower House, passed the vote-on-account for meeting the government expenses till the full Budget was passed during the second leg of the current session.

It also approved the supplementary demands for grants for the current year. With this, the first phase of Budget exercise is over and the concerns on the lower house not transacting financial business in the wake of protest on Women’s Reservation Bill are settled.

The Rajya Sabha is now expected to take up the two Bills on Monday.

Showcasing the industrial growth figure of 16.7 per cent for January, which was released today, a confident finance minister said: “We can humbly claim that there has been a turnaround and 7.2 per cent (GDP advance estimates for 2009-10) is not a pipe dream.”

Mukherjee said the government was fully aware of the inflation concerns at the time of budget making but added that “inflation is not detachable from economy. It is an integral part of the system”.

Reacting to Sinha’s criticism on the falling domestic savings, Mukherjee said during the UPA tenure, “a breakthrough” in domestic savings had been achieved.

“The rate of domestic savings entered (the) 30 per cent (range) in 2004-05. There has been continuous upward movement. It came down to 32.5 per cent (of the GDP) but the fact is it has not come down below 30 per cent during six years…It is possible to reach 36 per cent.”

Gross domestic savings at current prices in 2008-09 amounted to 32.5 per cent of GDP at market prices as against 36.4 per cent in the previous year on account of fall in the savings rate of public and private sector.