Finance minister Pranab Mukherjee on Monday said his remarks that rising subsidy bills were giving him "sleepless nights" were made in a lighter vein and asserted that the economy has the "resilience" to meet any challenge.
"My sleepless nights remark was made in a jocular vein. I did not know it will make headlines. Our economy has the strength, the resilience and the fundamental skill to work its way out of any problem," Mukherjee, who was here to canvass for the Congress party on the last day of campaigning for third phase of assembly elections in Uttar Pradesh, said.
"Our economy is growing at the rate of 7% when the US is not able to grow at more than 1.5% and the European Union is faring no better. I do not wish to say that I am content with the current rate of growth, but that we are capable of facing challenges," he asserted.
Replying to a query, Mukherjee said, "It is wrong to say that the government has not done anything to control inflation. To cite an example, food inflation was soaring at 22% in 2010, but has been brought down to a negative rate in 2011."
Worried over the impact of rising expenditure on the fiscal deficit, Mukherjee had last week said he is "losing sleep" over skyrocketing subsidy bill which could exceed budget estimates by over Rs 1 lakh crore in 2011-12.
"As Finance Minister when I think of the enormity of the subsidies to be provided, I lose my sleep. There is no doubt," he had said at a conference in New Delhi.
The fiscal deficit, estimated at 4.6% of the Gross Domestic Product (GDP), is expected to be around 5.6%, mainly on account of factors like subdued revenue collection, poor disinvestment receipts, high global commodity prices and increasing subsidy bill.
The government had earlier said that its subsidy bill is likely to increase by over Rs 1 lakh crore, over and above the original estimate of Rs 1.34 lakh crore, mainly on account of higher outlay towards fertiliser, food and oil.
Mukherjee also expressed displeasure that "every chief minister blames the Union Finance Ministry whenever confronted with the problem of rising prices.
This is despite the fact that states are major beneficiaries of taxes imposed on goods," he said.
"As per recommendations of the Finance Commission, a major chunk of tax revenue is being transferred to the states. The states, however, are not able to utilize the money. Moreover, most of the states seem reluctant to make effective use of mechanisms devised to plug leakage of funds", he said.
The Finance minister was accompanied by Minister of State for Parliamentary Affairs Rajeev Shukla who blamed the state governments for the steep rise in petrol prices.
"The Centre is earning much less by way of taxes on petrol and diesel than states. They are not ready to cut down on their share but they are quick to pass the buck to the Centre," he said.
Shukla claimed Congress-ruled states like Maharashtra and Andhra Pradesh had done their bit in reducing their share of taxes and hence petrol was available there at a lower price.
"You can even compare the prices of petrol and diesel in Congress-ruled Delhi and Haryana with the prices in Noida, which is just a few kilometres away in BSP-ruled Uttar Pradesh. You will get the picture", Shukla said.