Finance Minister’s remarks at press conference

27-5-2009

Contents

Finance Minister Shri Pranab Mukherjee addressed his first press conference here today, after joining office on 25th May, 2009. Following is the text of his opening remarks at the press conference:

"According to our manifesto, the new Government is required to present the Union Budget within 45 days of coming to power. We will adhere to this schedule and propose to present the Budget in the first week of July. The regular budget 2009-10 exercises are underway in full swing.

Reviving the growth momentum of our economy which has been affected by the global financial crisis is the top most priority of this Government. The fiscal prudence has to be kept in mind while taking steps for reviving the economy.

As you all know, a major consequence of the global financial crisis has been the loss of confidence among industry and business. Various coordinated steps taken by the government and the RBI have stabilised the economy in a short period of time. The economic system was keenly looking forward to a stable and effective government to steer it out of the current situation. The mandate of the people has provided that booster dose and led to a widespread "feel good" sentiment. I am aware that we need to rapidly build on that with concrete steps which we shall do.

We are assessing the impact of three doses of economic stimulus we announced in December, in January and in the Interim Budget. Sustained stimulus to growth can be harnessed by the next round of economic reforms. We have a broad plan of action in mind. I will get additional inputs when I have my pre-budget consultations with different stakeholders. All this will be distilled into a concrete short-term and medium-term vision and strategy for India's economic growth.

Industry and business have been hurt by the cost of finance and its easy availability. While much has been done in the last 8 months and international capital flows have resumed, the cost and the speed with which finance can be accessed remains a matter of concern. One of the first steps I propose to take is to meet bankers and get them committed to a more benign plan of action.

The government has the opportunity to present its vision and approach for the next five years in the forthcoming budget. Broadly, the election results have vindicated the strategy of "inclusive growth". I have no hesitation in saying that alongwith reviving the momentum of growth and employment creation, our government will strengthen the various "inclusive" elements in the coming budget.

The Government will have to focus on implementing and strengthening its infrastructure investments. These concerns will be addressed with a view to impart further momentum for an early return to the high growth path of recent years. The pipeline of infrastructure projects will be re-appraised and made more robust. Where necessary, policy and procedures will be calibrated to give a boost to infrastructure spending.

Prophets of doom have been unduly focusing on increased public spending and consequent increase in the revenue and fiscal deficits in the recent past. We are hopeful that an early return to our recent growth performance will help us come back to our preferred path of fiscal prudence. Let me say unambiguously that we are committed to restoring growth and employment and that would not have been possible without increased spending funded by incremental borrowing. This would need to be further continued in 2009-10-the current year. However, we are equally committed to the process of fiscal consolidation over a period of say 2 to 3 years.

We need to seize the opportunity presented by the current circumstances for pushing long pending reform measures. These include measures in the area of financial sector and real economy, to make the economy more competitive and the economic regulatory and oversight system more efficient, quick and responsive to global developments.

As you know, the Prevention of Money Laundering Act Amendment was passed by Parliament recently. We propose to bring this into force to make India's Anti- money Laundering regime stronger."

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