Govt will take more steps to support labour intensive sectors

NEW DELHI: Minister for External Affairs Pranab Mukherjee, who holds the finance portfolio, promised on Friday that the government will take more steps to support labour intensive sectors and emphasised that the Gandhian model economy with a rural focus was the need of the hour. Mr Mukherjee said the government expects that despite the global economic downturn, the economy would expand at 7% this fiscal, after recording an average growth rate of 9% for the last five years.

"As the next year's outlook is more downbeat, the government has taken a number of measures to inject liquidity, to bring down the cost of borrowing and to stimulate demand through fiscal measures. When necessary, the government will take further steps to ensure that labour-intensive sectors are less adversely affected," the minister said at a conference on the global economic crisis by Research and Information System for Developing Countries (RIS), a think-tank.

He said the country has the capacity to drive the economy forward on the strength of domestic demand by investing more on infrastructure, labour intensive sectors and on the improvement of the social safety net.

Speaking to reporters later on the margins of the conference, Mr Mukherjee said it was not decided yet as to when some of the measures will be announced. "You will have to wait till I present the budget," he said. The interim budget is due on Feb 16. Home Minister P Chidambaram, who was the finance minister till recently, had said on Thursday that the government would be within its rights to announce new measures, despite ensuing elections.

Mr Mukherjee also said that global financial institutions need to put more resources for developing countries. They have to allocate funds for the rural economy, social infrastructure and local communities. "The resources must be put in institutional capacity-building and skills' development....To me, there is a necessity, once again, to revisit Gandhian economics with its emphasis on rural self-help and sustainable economic development. Anything contrary would be disastrous," said Mr Mukherjee.