Finance minister Pranab Mukherjee on Wednesday promised a large dose of government spending on infrastructure and nudged banks to reduce interest rates to help Indian companies tide over the ripples of the global economic downturn.
“The government will have to focus on implementing and strengthening its infrastructure investments. These concerns will be addressed with a view to impart further momentum for an early return to the high growth path of recent years,” Mukherjee said in his first formal news conference after taking charge.
The 73-year-old minister, who returned to the prized portfolio he held 25 years ago, said interest rates could come down in the near future, and reviving the growth momentum was a top priority for the new government.
“I will have a meeting with the bankers,” Mukherjee said.
“I expect that they will take advantage of the monetary policy, which the Reserve Bank of India (RBI) has announced from time to time and I will have to see how the credit is made available quickly and to what extent it can be made cheap.”
The minister said the government intends to push for reforms in the financial sector and the “real economy” – a reference to physical goods and services. Financial reform options include allowing higher foreign investment in insurance companies.
“We have a broad plan of action in mind. I will get additional inputs when I have my pre-budget consultations with different stakeholders. All this will be distilled into a concrete short-term and medium-term vision and strategy for India’s economic growth,” Mukherjee said.
He said the opportunity presented by the current economic circumstances needs to be seized to push long-pending reform measures. “These include measures in the area of financial sector and real economy to make the economy more competitive, regulatory and oversight system more efficient, quick and responsive to global developments,” he said.