More steps in pipeline to support labour-intensive sectors: Pranab

More steps in pipeline to support labour-intensive sectors: Pranab
The Economic Times, February 07, 2009, Page 7

Our Bureaus NEW DELHI

EXTERNAL affairs minister Pranab Mukherjee, who is looking after the finance portfolio, said on Friday the government will take more steps to support labour-intensive sectors and emphasised that the Gandhian model economy with a rural focus was the need of the hour. Mr Mukherjee said the government expects that despite the global economic downturn, the economy would expand at 7% this fiscal, after recording an average growth rate of 9% for the last five years.

“As the next year’s outlook is more downbeat, the government has taken a number of measures to inject liquidity, to bring down the cost of borrowing and to stimulate demand through fiscal measures. When necessary, the government will take further steps to ensure that labour-intensive sectors are less adversely affected,” the minister said at a conference by Research and Information System for Developing Countries.

He said the country has the capacity to drive the economy forward on the strength of domestic demand by investing more on infrastructure, labour intensive sectors and on the improvement of the social safety net.

Speaking to reporters after the seminar, Mr Mukherjee said it was not decided yet as to when some of the measures will be announced. “You will have to wait till I present the budget,“ he said. The interim budget is due on February 16. Home minister P Chidambaram, who was the finance minister till recently, had said on Thursday the government would be within its rights to announce new measures, despite the ensuing elections.

Mr Mukherjee also said that global financial institutions need to put more resources for developing countries. They have to allocate funds for the rural economy, social infrastructure and local communities. “The resources must be put in institutional capacity-building and skills’ development....To me, there is a necessity, once again, to revisit Gandhian economics with its emphasis on rural selfhelp and sustainable economic development. Anything contrary would be disastrous,” said Mr Mukherjee.

The government is also pushing for a regional approach to lessen the impact of the economic crisis. Mr Mukherjee said that India is attaching great importance to regional groupings like the South Asian Cooperation, Asean and Saarc. Appreciating Asean for taking steps towards regional economic integration, he said: “A regional financial architecture, drawing upon the high currency balances in Asia, would mitigate the severity of the economic crisis for us.”

He further added that countries in Asia had the capability to push the economy forward by investing in infrastructure and labour-intensive sectors. “We, in Asia, have the capacity to undertake significant contra-cyclical steps to drive the economy forward on the strength of the domestic demand by investing more on infrastructure, on labour-intensive sectors and on the improvement of the social safety net,’’ he said.

Govt has its limitations: Nath
NEW DELHI: Fresh incentives to further stimulate the economy are still under formulation, commerce and industry minister Kamal Nath has said. The government will look at everything that can stimulate the economy, the minister said on Friday, adding the government also had its limitations. Speaking to the media after his meeting with the visiting Finnish trade minister, Mr Nath said some sectors have been hit because of contraction in demand and non-availability of liquidity internationally. “We are taking steps to ensure a level playing field and see that transaction costs are minimised by whatever procedures and whatever mechanism and tax neutralisation we can do. Of course, India cannot give subsidies which are not WTO compatible,” he said. The RBI will continue to take monetary steps to help the industry, he said.— Our Bureau