Mukherjee defends stimulus as finance minister

President Pranab Mukherjee has defended the steps he took as finance minister during the global economic crisis, saying the stimulus, which is now blamed by his successor for the current economic woes, was provided to revive sliding growth.

"From hindsight we can say that we did not understand the depth of the crisis at that point of time. So, immediately we had to rush, and like most other countries we provided stimulus package to ensure that fastest sliding down of the GDP growth leading to unemployment could be arrested," Mukherjee, who is in Brussels, said in an interview to Euronews.

He also said that he was made finance minister in the aftermath of the 2008 global financial crisis though he was already holding the important external affairs portfolio.

"When the crisis began, the first financial crisis in 2008, of course there was the delayed impact in India but just at that time I had to bear the additional responsibility of heading the finance ministry because my predecessor and also my successor Mr. Chidambaram was then shifted from the finance ministry to the ministry of home affairs because of some urgency," he said.

Mukherjee said he was made finance minister in the difficult economic environment because of his past experience.

"And with my substantive responsibility as foreign minister, I had to bear the additional responsibility of ministry of finance as I had past experience. I served as finance minister of Mrs. Indira Gandhi when she was prime minister in the 70s and 80s for a number of years. Therefore, I had to face this problem," the president said.

Mukherjee said that when he took over the finance portfolio from Chidambaram in early 2009, the growth rate was sliding sharply.

"My immediate concern was, as you have said, the great problem of India, very substantial. Indian GDP was growing at a fast rate of around 9 percent plus. But when I took over I found out that there was on a fortnightly basis sliding down of the GDP growth."

During a debate in the monsoon session of parliament in August, Chidambaram had, without naming Mukherjee, blamed his policies for the current economic mess, that include record current account deficit and high inflation. Chidambaram was finance minister till November 2008 and was succeeded in 2009 by Pranab Mukherjee, who remained finance minister till July 2012.

He said the stimulus package helped revive growth that had slumped to 6.7 percent in 2008-09, the year of the financial crisis, from 9 percent recorded the previous year.

Mukherjee pointed out that growth jumped to 8.7 percent in 2009-10 and to 9.3 percent the following year and started falling from 2011-12, when it slumped to 6.2 percent. The country's GDP growth has fallen further to 5 percent in the financial year ending March 31, 2013.

The situation has further worsened this fiscal and in the first quarter it slumped to 4.7 percent.

On reforms, Mukherjee said India cannot afford to focus merely on its manufacturing and services sector, on the line of developed countries.

"But in India we cannot afford to adopt that model because I have to feed 1.2 billion plus people ..Therefore, I shall have to emphasise on agriculture, I shall have to emphasise on the development of rural India which is about more than 70 percent of our total population, of the huge population of 1.2 billion plus people."