Pranab pegs growth at 6.7%

Pranab pegs growth at 6.7%
The Financial Express, July 30, 2009, Page 2

fe Bureau, New Delhi

A day after the Reserve Bank of India pegged economic growth at 6% for 2009-10, finance minister Pranab Mukherjee on Wednesday told the Rajya Sabha that he expected growth to stay at the 6.7% level recorded in 2008-09. Pointing to the positive trends in manufacturing sector output as well as core sector production in June, Mukherjee expressed hope that the trend gathered momentum ‘when the busy season comes.’

“With that momentum, it will be possible to achieve the desired level of growth. As you know, normally the RBI’s estimate is a bit conservative; I would not say very conservative, but a bit conservative. Even they have upgraded our GDP growth,” Mukherjee said. The finance minister said international rating agencies and the IMF, which had earlier thought India would grow at 5% or less this year, now agreed that India would have around 6.6% growth.

Explaining the fresh sops announced for the housing sector in the Lok Sabha as amendments to the Finance Bill, Mukherjee said housing activities were slowed down from middle of 2007 to 2008. Sending out a subtle warning to housing project developers, the minister said, “I am reiterating my expectation from developers, who will get this advantage, that it should get reflected in reduced price of houses which they will sell to buyers. Unfortunately, it happens in our country. They forget it and they do not pass it on.”

Responding to MPs’ queries on disinvestment under the UPA-II, Mukherjee said, “Disinvestment is a continuing process. There is nothing dramatic about it. From 1991 onwards, if I remember correctly, we have mobilised Rs 53,000 crore. It is an obvious and continuous process — by whatever nomenclature you may call it —disinvestment or people’s participation or strategic sale.” Dismissing the notion that the Centre was eager to push disinvestment to fix the soaring fiscal deficit, the finance minister said proceeds from stake sales would be invested in the National Investment Fund (NIF) as per the policy. “...From the corpus of the NIF, it may be used for specific social sector projects. Part of it will be utilised for meeting the public sector requirements like upgradation, modernisation and expansion. Therefore, it is not merely to meet the fiscal deficit,” he underlined.

Responding to BJP MP Ravi Shankar Prasad’s queries about Prime Minister Manmohan Singh’s commitment to initiate action on unearthing black money stashed abroad within 100 days, Mukherjee said that actions had been initiated. “Now we are going to accept the code which has been prescribed by G-8 countries by which the exchange of information will take place. The legal framework for that is the avoidance of double taxation. We have entered into such avoidance of double taxation agreements with various countries, which are nearly 100,” the minister said.

“We have taken up amending the provisions of those Acts so that exchange of information is possible. Certain countries have their own secrecy banking rules. Switzerland is well known for it,” Mukherjee said, in reference to a particular recent case where information was shared with India on the condition that it could not be made public.

“But in the context of the financial crisis, now they have agreed to share this information, provided there is a legal framework and it is required only for the purpose of tax collection, not for any other purpose. Keeping that in view, we are proceeding. Therefore, action to bring back the money, which has been stashed away, is also being taken,” the FM said.