By IANS,
Mumbai: The basic strategy to bring the country’s economy back on track is by stimulating domestic demand, Finance Minister Pranab Mukherjee Saturday said and exuded confidence that the RBI would adjust the monetary policy to address the ills plaguing the sector.
He was addressing concerns of industry and credit rating agencies over the current turmoil in the sector. Global rating agency Standard & Poor’s has said that India could become the first of the BRICS – Brazil, Russia, India, China, South Africa – economies to lose its investment-grade status.
“I am confident it (Reserve Bank of India) will adjust the monetary policy…as we are adjusting the fiscal policy,” Mukherjee said.
“The basic strategy should be to stimulate the domestic demand …we are competent enough to rise to the task of meeting grave challenges,” Mukherjee said here at a seminar organised by industry lobby Associated Chambers of Commerce and Industry (Assocham). He said that the country has the resilience to face grave challenges.
This was Mukherjee’s first public engagement after he was declared as the United Proressive Alliance (UPA) candidate for the forthcoming Presidential elections next month.
“As the finance minister, I cannot ignore the ground reality, apprehensions of Indian industry and credit rating agencies,” he said, adding that the government was taking due note of the concerns raised by them.
He spoke on his favourite subjects-finance, tardy growth, high fiscal and current account deficits, inflation and negative challenges facing the Indian economy.
While admitting that these are “difficult times”, Mukherjee assured that the government’s finances remain strong. Amid expectations of interest rate cut likely to be announced by the RBI Monday, he said the federal bank would take necessary monetary measures.
Discussing the Eurozone crisis, the finance minister pointed out that India is as concerned as others whether Greece would continue to be part of the currency union.
These developments are also impacting the value of rupee which has lost a sharp 20 percent against the dollar in the last one year, he said.
“We are taking steps, not sitting idle, if federal finances weaken, nobody would be able to bail out the Indian economy,” Mukherjee added.
Mukherjee was accorded a hero’s welcome by the top captains of Indian business and industry here.
The finance minister appeared relaxed, cheerful after a hectic evening Friday in New Delhi when he was named by his party and coalition to be their candidate for the country’s president, which seems a foregone conclusion.
Mukherjee spoke beyond the allotted time but nobody seemed to mind as the entire gathering remained glued to each word he uttered.