Inflation down but not out: Pranab

Says high inflationary pressure is affecting India's growth rate

PTI | February 6, 2012



Finance minister Pranab Mukherjee says though food inflation has moderated the country is not out of the "woods totally", asserting inflationary pressures must be brought down to a tolerable and acceptable level before Indian economy can revert to high growth.

"In the last 20-22 months food inflation has been obstinate. Food inflation reached as high as 22 percent in February 2010. From December onwards the pressure has started moderating but I would have to say that we have not come out of the woods totally," Mukherjee said in an interview to CNBC Awaaz .

"It (inflation) must be brought to tolerable and acceptable level. It is a difficult job, but that is the job of the Finance Minister and the Government of India today," he said.

According to Mukherjee, high inflationary pressure is affecting India's growth rate, which is expected to be only 7 per cent this year. "In the first two quarters our GDP growth is 7.3 per cent. I do not think that in the remaining quarters there would be any substantial improvement. Perhaps we may have to settle down with GDP growth of 7 per cent," he said.

On the outlook for the near future, he said: "Given the Eurozone problems, the overall scenario is not very encouraging...If a credible package for the Eurozone is worked out and if the US economy stablises, then in the next couple of years we must be able to come back on the path of high growth trajectory."

"This year will be difficult and the first few months of the next year will be equally be difficult," he added.

On the Supreme Court's ruling to set aside the Bombay High Court judgment asking UK's Vodafone to pay income tax of Rs 11,000 crore, Mukherjee said: "We are examining what the government can do to protect the interest of revenue department as well as confidence of foreign investors. An appropriate decision will be taken by the government."

On the clean chit given by a trial court to Home Minister P Chidambaram on his alleged role in the 2G spectrum scam, he said: "I have already welcomed the judgment of the trial court...Now Sri Swamy should be satisfied with it...Atleast one problem has been resolved."

Citing lack of political consensus on various issues such as the Lok Pal bill and Foreign Direct Investment in multi-brand retail, Mukherjee said the BJP was acting like an obstructionist.

"The BJP and other political parties should not play the role of obstructionists, they should play the role of constructive opposition," he said.

Even in the case of FDI in mutli-brand retail which could have been down through an Executive order without Parliamentary approval, opposition parties played the role of an obstructionist, he added.

On the issue of lack of consensus within the government in the context of opposition by Trinamool Congress to some policies, he said even Prime Minister Manmohan Singh is making an effort to resolve those problems.

"There are the problems which have to be resolved. I am addressing the issues of coal leakages and environment. The Prime Minister is also having meetings...Efforts are being made to resolve inter-ministerial problems," he said

Commenting on infrastructural growth in the country, Mukherjee said it can only be done with active participation from private parties. "In infrastructure growth is taking place. But the growth is very high. In the 11th plan we have invested USD 560 billion in infrastructure and the requirement in the 12th plan is USD one trillion, of which 30-35 per cent will have to come from the private sector...I met business people in Chicago and invited them to come and invest in India and many of them have expressed keen interest," he added.

 

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