Constitutional constraints tied me down
Acting Finance minister Mr Pranab Mukherjee in an interview with ET explained about budget expectations and constutional constraints.
By PR Ramesh, ET Bureau |
| Pranab Mukherjee, Acting Finance Minister |
Pranab Mukherjee is no stranger to Budget preparation. He was part of the budget-making process in 1976 when he handled the independent charge of the revenue department. And in the early ���80s, he presented three Budgets in a row as Indira Gandhi���s finance minister. Excerpts from a post-budget interaction with ET correspodent:
There were major expectations...The industry is disappointed...
You have to keep three issues in mind. One, we had taken a series of measures before the Budget: The government had announced two stimulus packages...We have already approved two major infrastructure projects... Second, everytime the FM should not be expected to take a rabbit out of the hat. And third, I cannot be unmindful of constitutional constraints.
Every announcement has to be backed by adequate funding. One should not be irresponsible. We did not wait for the Budget to announce the stimulus packages. Nor did we wait for the Budget to cut prices of fuel. We have been using fiscal and monetary measures to address the difficulties faced by the industry and the people.
The Centre���s effort at fiscal stimulus needs matching step-up in expenditure by states. How do you propose to rope them in?
They are equal partners in these efforts. The money provided for these projects are reflected in the RE. The ultimate implementing agency of many of these programmes are states. They are responding well.
The fiscal deficit has reached alarming levels...
You were candid in admitting that things are not good and we have to be prepared for an adverse year?
Next year is going to be tougher. Within the available numbers, I have stepped up allocations for rural development, for Bharat Nirman, for NREGS and for infrastructure development. All these will raise indigenous demand.
There were major expectations...The industry is disappointed...
You have to keep three issues in mind. One, we had taken a series of measures before the Budget: The government had announced two stimulus packages...We have already approved two major infrastructure projects... Second, everytime the FM should not be expected to take a rabbit out of the hat. And third, I cannot be unmindful of constitutional constraints.
Every announcement has to be backed by adequate funding. One should not be irresponsible. We did not wait for the Budget to announce the stimulus packages. Nor did we wait for the Budget to cut prices of fuel. We have been using fiscal and monetary measures to address the difficulties faced by the industry and the people.
The Centre���s effort at fiscal stimulus needs matching step-up in expenditure by states. How do you propose to rope them in?
They are equal partners in these efforts. The money provided for these projects are reflected in the RE. The ultimate implementing agency of many of these programmes are states. They are responding well.
The fiscal deficit has reached alarming levels...
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These are unusual times. Chidambaram had given revenue concessions worth Rs 40,000 crore. If GDP growth dips 2%, it will impact growth. Tax revenue is down. The 9% growth attracted inflows. We could create a large forex reserve. But with it, global inflation also reached our shores. The excess liquidity had to be mopped up to control inflation. Industry can legitimately claim that the government should step in at this point. But I cannot do it through an interim budget because of constitutional constraints.You were candid in admitting that things are not good and we have to be prepared for an adverse year?
Next year is going to be tougher. Within the available numbers, I have stepped up allocations for rural development, for Bharat Nirman, for NREGS and for infrastructure development. All these will raise indigenous demand.
The focus of the Budget was rural India. Will it help the UPA politically?
In the past four years, the farmers have got a good deal from this government. The wheat MSP increased from Rs 630 in 2004 to Rs 1,080 per quintal in 2008. Paddy saw an increase of Rs 350 per quintal in the past five years. So, farmers are getting more now. And schemes like NREGS are giving them an assured income.
Your opponents charge you with fiscal recklessness.
If you have to maintain high growth cycle, we have to compromise on fiscal discipline.
But won���t it hurt the economy?
I agree. That���s why I said that a mid-term correction will have to be made. We cannot be totally irresponsible.
How will you soothe the frayed nerves of industry?
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My mandate is only for less than two months. It is not a normal budget and these are not normal times.Senior government leaders have been saying that the RBI can take monetary measures.
Of course, the RBI can take monetary measures. They have been vested with this power by an Act of Parliament. But expenditure and tax proposals will have to get permission of Parliament. And the party in power should not do anything that would be seen to be overstepping its brief.
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