Austerity steps soon, but don’t panic: Pranab Mukherjee
Finance minister Pranab Mukherjee told Parliament Wednesday the government would have to resort to 'unpopular austerity measures' given India’s fiscal problems and with international oil prices rising, but that there was 'no need to press the panic button'.
Replying to the Rajya Sabha debate on the Finance Bill, which was later passed by the House, the minister said: “This is a difficult world, the international situation is difficult. Country after country is facing a major economic crisis... I’m going to take a few unpopular steps. I’m going to issue some austerity measures.”
Mukherjee, however, did not spell out what these austerity measures will be. He also said Dr C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, had been asked to suggest ways to reduce India’s dependence on imported oil.
He said he was 'really worried' as the stock market had fallen almost 300 points intra-day Wednesday, but said it was the result of the Eurozone crisis and was felt by markets across Asia.
Mukherjee sounded confident that India’s growth rate 'will pick up' soon, saying: “The Indian growth story is intact. It will move up.” But he added: “We have to see this in the compass of four, five or six years, and not in one or two or three quarters.”
The finance minister made it clear that though he himself belonged to West Bengal, there was no question of the government giving 'preferential' treatment to West Bengal over grant of a special package. He said a committee had been set up to look into the problems of three debtstressed states — West Bengal, Punjab and Kerala.
On the Eurozone crisis and its impact on India, the minister said: “Don’t think I’m trying to pass the buck to somewhere else... The buck stops with me, I agree... The buck stops at our door, and I own the responsibility.” Reaching out to the Opposition, he said major challenges can be dealt with by 'joint action'.
On the government’s decision to amend the Income-Tax Act with retrospective effect following the Supreme Court decision in the Vodafone tax case, and on certain concerns expressed by members, Mukherjee said Vodafone was clearly told it had to pay tax on its acquisition of Hutchison’s stake in Hutchison-Essar through a $11.2 billion deal signed in the Cayman Islands.
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