Amid rising prices, sliding rupee and falling growth, finance minister Pranab Mukherjee on Wednesday said that the fundamentals of the Indian economy were robust enough to tide over the crisis.
“I have full faith in the resilience of the Indian economy and we surely will be able to overcome the current economic challenges successfully as we have done in the past, many times,” he said.
Mukherjee was addressing probationary officers of the Indian Economic Service in the Capital.
Rising prices and sliding growth remain key worries for the government, which is already battling a heavy debt burden.
Retail prices of everyday products and services — from food to footwear and movie tickets to medicines — rose sharply in April, signalling India’s inability to control household inflation, partly stoked by a falling rupee.
India's overall consumer price inflation — a more realistic cost-of-living index because it captures shop-end prices — rose 10.4% in April. In cities, it was even higher at 11.1% compared to 9.9% in rural India. Retail inflation for March was 9.4%.
The rupee’s falling value makes imports costlier, pushing up prices of many manufactured products that use small quantities of imported raw materials. It also widens the current account deficit (CAD) or the gap between export earnings and import payments, a worry for an economy already slowing down.
“Our efforts are directed towards overcoming difficulties facing the economy and aim at moderate inflation and acceptable level of fiscal deficit and CAD,” said Mukherjee.
Last week he promised to bring in “unpopular austerity” measures to curb public expenditure.