‘Will strive for growth, but without the risks’
In the backdrop of a raging debate within the Congress over the extent of fiscal deficit the government could risk to fuel recovery, Prime Minister Manmohan Singh indicated on Thursday that fiscal prudence and disinvestment of government stake in public sector companies would be tackled in the government’s first budget, to be presented early July.
“We would ensure economic growth momentum but at the same time fiscal prudence will be kept in mind,” the Prime Minister said on the sidelines of the ceremony at Rashtrapati Bhavan to swear in the second edition of his 79-member Council of Ministers.
Singh said economic growth would not come at the cost of fiscal prudence.
Many Congress leaders have been pressing for higher public spending to quicken the pace of recovery, arguing that the government should not let concerns of a rising fiscal deficit — the gap between the government’s revenues and expenditure bridged through borrowing — stand in the way at this juncture.
“Fiscal prudence and disinvestment of public sector units — all these issues will be tackled by the finance minister in the Budget,” Singh said.
The Disinvestment Department is already working to kick-start the stalled programme of shedding stakes in central public sector undertakings, including letting government-run firms go to the capital market for money needed for expansion rather than spending budgetary resources.
Union Finance Minister Pranab Mukherjee had on Wednesday acknowledged that there was no alternative to boosting growth in tandem with employment generation, for which the government was willing to increase its borrowing.
“Let me say unambiguously that we are committed to restoring growth and employment and that would not (be) possible without increased spending funded by incremental borrowing. This would need to be further continued in 2009-10,” he had said.
Mukherjee had, however, acknowledged that fiscal consolidation was important and outlined a two-to-three year framework for this process.