The Finance Minister, Mr Pranab Mukherjee, today cautioned that too much emphasis on meeting the fiscal deficit target of 4.6 per cent for 2011-12 may hurt economic growth.
“We have to be careful not to over-do ourselves in reaching the target since that can have an excessive slowing down impact on growth,” Mr Mukherjee said in Lok Sabha today in a suo motu statement on inflation.
The Finance Minister's statement on inflation is likely to discussed by the Lower House on Wednesday.
Mr Mukherjee's caution against over-stretching for the purpose of meeting the fiscal deficit target is a pointer that the Centre may refrain from any aggressive belt-tightening on the expenditure front, say economy watchers.
The Finance Minister highlighted that the fiscal deficit target of 4.6 per cent has become a difficult target given the deterioration in the global economy and its impact on India over the last 3-4 months.
The Centre's fiscal deficit as a percentage of GDP was 6.4 per cent in 2009-10. In 2010-11, this was brought down to 4.7 per cent.
On headline inflation, Mr Mukherjee said that he hopes to see the March end inflation between 6 and 7 per cent. The Finance Minister assured the Lok Sabha that the Government was committed to bring down inflation to more acceptable levels.
“While there has been a steady improvement in the inflation situation in India, there are important tasks ahead to be undertaken to get to the desired outcomes,” he said.
Farmer-retail link
Mr Mukherjee said that there is an urgent need to amend and enforce the Agriculture Produce Marketing Act to enable farmers to bring their products to retail outlets and also allow retailers to directly purchase from the farmers.
“This would bring better remuneration to farmers, check wastage and allow competitive prices in retail markets. Collectively, we also need to take steps that allow unhindered flow of food and other perishable items from one region to another.”