New Delhi (The Statesman/ANN) - Amid declining value of rupee and rising inflation, Indian finance minister Pranab Mukherjee today said the Indian economy is resilient enough to overcome challenges and the government will make efforts to moderate the rate of price rise and reduce current account deficit (CAD).
"I have full faith in the resilience of the Indian economy and am sure that we will be able to overcome the current economic challenges successfully as we have done in the past, many times," he said.
"Our efforts are directed towards overcoming difficulties facing the economy and aim at moderate inflation and have acceptable levels of fiscal deficit and CAD," Mukherjee added.
The minister said this while addressing a meeting of the probationary officers of the Indian Economic Service at his office in the North Block.
The Indian economy, he said, too was facing "some challenges" due to the ongoing crisis in the eurozone countries and its impact on other parts of the world.
While the CAD, which indicates the difference between inflow and outflow of foreign exchange, is expected to rise to four per cent of the GDP in 2011-12 from 3.3 per cent a year ago, high crude oil prices is expected to put pressure on government finances.
More importantly, the steep fall in rupee's value, which crossed 56 rupees to a dollar, is expected to push up the cost of imports, especially petroleum products and imported fertiliser. Oil marketing companies have been clamouring for increase in prices of petroleum products.
The efforts of the government, Mukherjee said, would be to put the economy on high growth trajectory.
The Indian economy was growing at over nine per cent before the global financial meltdown in 2008 pulled down the growth rate to 6.7 per cent in 2008-09.
Thereafter, the economy recorded a growth rate of 8.4 per cent for two consecutive years before sliding again to 6.9 per cent in the previous fiscal.
On the positive side, Mukherjee said the services sector and agriculture have recorded good growth. "Farm sector growth is likely to be good due to expected good monsoon", he added.
Referring to political compulsions of the United Progressive Alliance government, he said: "As a ruling party we have to carry all partners with us and that's why it sometimes takes a little longer. But at the end we are able to take decisions and implement it".
As regards the price situation, headline inflation, represented by the wholesale price index, rose to 7.23 per cent in April from 6.89 per cent in the previous month, while retail price inflation entered double digits of 10.36 per cent in April from 9.38 per cent in March.
'Reforms not on back burner'
Facing criticism over non-passage of key economic Bills in the Budget Session of Parliament, the government insisted that its reforms agenda was not on the back burner. "One must not presume that the government agenda on economic reforms is on the back burner. Law making is a very protracted process," parliamentary affairs minister Pawan Kumar Bansal told reporters here.
Noting that 21 bills were passed in the Budget Session, he said only those legislations on which there was broad agreement with the opposition were taken up.
Bansal said that since the government had a heavy agenda this session, it decided to bring those bills on which there was some disagreement in the next session after carrying out necessary amendments.
At the start of the Budget Session, finance minister Pranab Mukherjee had said he was looking forward to bringing 3-4 key economic reform bills. - With reports from PTI
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