India: Govt’s Options To Deal With Slowdown Limited –Pranab

The Union Finance Minister, Pranab Mukherjee delivering the

inaugural address at the International Conference on

Economic Policies for Emerging Economies,

in New Delhi on December 14, 2011. PIB Photo

NEW DELHI (NNN-PTI): Concerned over the deteriorating global economic situation, Finance Minister Pranab Mukherjee on Wednesday said the government has limited options to combat the slowdown.

Speaking at the Delhi Economics Conclave here, he noted that major economies worldwide, particularly those in Europe, have not yet emerged from the slowdown in late 2008 despite the aggressive use of fiscal and monetary tools.

“All these (slowdown) have happened despite the aggressive use of both fiscal and monetary policy tools... it poses serious problem for policymakers. Going forward, it limits our options in dealing with the emerging situation,” Mukherjee said.

India’s GDP growth rate slowed to 6.9 per cent in the second quarter of 2011—12 from 8.4 per cent in the corresponding period of the previous year.

In the backdrop of the continued uncertainty in the global economy, coupled with domestic factors, the government last week slashed India’s GDP growth forecast for the current fiscal to 7.5 per cent (plus/minus 0.25 per cent) from the earlier estimate of around 9 per cent.

When the economic slowdown occurred in 2008, India -- like other countries -- had rolled out a stimulus package of about Rs 1.86 lakh crore, or 3 per cent of the GDP, to provide a cushion to the domestic industry against external shocks.

Mukherjee’s statement comes just days before the RBI is scheduled to review the monetary policy. -NNN-PTI