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Leaning on the strong performance of the States, Finance Minister P. Chidambaram on Thursday said he was confident that India will “bounce back”, and there was no need for any pessimism about the economy.
Participating in the discussions in the Lok Sabha on the first batch of supplementary demands for grants, Chidambaram said all the States, except two, were growing at over 5 per cent — much higher than the overall economic growth, which was under 5 per cent.
“I am not placing any value judgment. But we need to look at this matter closely… and not look at the economy with pessimism, as seen by some,” he said.
The Lok Sabha later passed the demands for grants, which involves an additional expenditure of Rs 7,499 crore, including a net cash outgo of Rs 127.14 crore. As most of the grants were of technical nature and would be matched by savings elsewhere, the cash outgo has been limited to Rs 127.14 crore.
Worried about growth
Stating that the economy was going through a period of stress, Chidambaram said the Government was worried about the decline in growth in recent quarters. Chidambaram described the first quarter GDP growth of 4.4 per cent as “disappointing”, adding that there was no need to believe that all was “gloom and doom”. There will be ups and down for every country, he added.
Taking a dig at the Opposition, he said the average growth in the first four years of UPA-II was higher than the average GDP growth during the National Democratic Alliance regime.
Former Finance Minister and senior BJP leader Yashwant Sinha intervened to say that the Central Statistics Office (CSO), which releases national-level data on economic growth, was not a credible organisation.
He said the CSO had revised industrial output twice in a month and other revisions were made frequently. “Let not an impression be created from your (Chidambaram’s) statement that India’s growth story is an aggregate of State-level performance. It is much more than that,” he said.
Sinha pointed out that CSO data captured trade performance and certain services — areas not covered by the States. In his reply, Chidambaram said he did not dispute Sinha’s observations about the CSO.
RUPEE UNDERVALUED
The Finance Minister said the slide in the rupee was a matter of concern. “Some level of adjustment was much required. But rupee has overshot its true value. It is now undervalued.”
He was confident that the rupee would correct by itself if some of the macro-economic issues were sorted out.
The Minister said the Government was committed to meeting the tough fiscal deficit targets for the current financial year. “This is a year of fiscal consolidation... I have repeatedly said that the 4.8 per cent which we have estimated will be the fiscal deficit is a red line. The red line will not be crossed,” he said.
Food Security Bill
Talking about the much debated Food Security Bill, he said the Government was taking a number of steps to roll out the new law and that ways will be found to foot the bill. “Wheat and rice allocation will go up by 50 lakh tonnes post the Food Security Bill,” he said.
UTTARAKHAND
Chidambaram said the Government stood by its commitment to help flood-ravaged Uttarakhand find its feet. He said the Centre was in talks with the Asian Development Bank for a $200-million loan for the State’s reconstruction.
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