Booster shot for economy to be announced on Monday

While Prime Minister Manmohan Singh, flying home from the Rio+20 summit on Saturday, said his government would take "effective and credible" measures to boost the economy, outgoing Finance Minister Pranab Mukherjee told newspersons at his ancestral village that the RBI Governor would announce on Monday fresh steps on economic reforms to improve the market condition.

Sending out a reassuring message to foreign investors, Singh said the steps would help reduce the country's high fiscal deficit and tackle the looming balance of payments (BoP) problem, besides stabilising the rupee which plunged to an all-time low of 57.30 against the US dollar on Friday.

Singh's promise of a period of "bold steps" and "hard work" comes amid dismal ratings for India by global credit-rating agencies, Fitch and Standard and Poor. He, however, denied suggestions that the economy might have descended into a period of stagflation, and asserted there was only a "slowdown" which he was confident of turning around with support from across the political spectrum. He said the economy, which grew at a nine-year low of 5.3 per cent in the March quarter, would "improve" and grow at nearly 7 per cent "in the rest of the year".

Mukherjee, the UPA's presidential candidate, also tried to allay fears about the country's financial situation before relinquishing the Finance Minister's post on June 26. "We will be able to take certain measures to be announced on Monday which will improve market condition," he said. "The foundation of the country's economy is strong and it is evident from the fact that we have achieved a GDP growth of 6.5 per cent in the last fiscal," he said.

He attacked critics who had observed that the country's economy performed badly during his tenure. "We had achieved nine per cent GDP growth some years ago. The GDP growth, however, went down to 8.4 per cent in 2009-10. In the last fiscal, our GDP growth stood at 6.5 per cent. How many countries have achieved such growth?" Mukherjee asked. "Doubts have been raised whether our economy can fight back. I will say of course it will fight back," he said.

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