New Delhi: The Union government may announce further measures to boost growth if required to fight the global economic downturn, home minister P Chidambaram said on Tuesday.
“We will keep a careful watch on the situation. If necessary, further measures of stimulating economic growth will be taken,” he said replying to supplementaries during Question Hour in Rajya Sabha here.
The former Finance Minister, answering questions on behalf of Prime Minister Manmohan Singh who now holds the finance portfolio, said government’s bias in favour of growth will continue.
While in early part of 2008, the policy bias was towards controlling inflation, the bias today is towards growth, he said while rubbishing theories that India was slipping into recession.
“India is nowhere near recession. We are (only) affected by slowdown in global growth,” he said.
On the devaluation of rupee against the US dollar, he said government does not take a view on exchange rate and Reserve Bank of India intervenes in the market only to prevent excessive volatility.
He, however, admitted that the depreciation in rupee had partly offset the benefit of decline in international prices of crude oil and other commodities.
While the benefits of decline in crude oil and commodities were instantly reflected in lower domestic fuel and metal prices, those in foodgrains were not evident as India was not part of international trade.
While the inflation rate has softened with the fall in global crude oil and commodity prices, the same was not entirely reflected in primary article prices.
“Unless production increases, there will be a pressure on prices,” Chidambaram said.
While the government tries to balance between inflation and growth, the bias had shifted towards inflation control in early 2008. “Today because of the downward trend of inflation... the bias has shifted in favour of growth.”
The government has addressed growth issue by a 4% across-the-board cut in excise duty and advising banks to lend to borrowers purchasing two and four-wheelers and homes.
Chidambaram said the gap between demand and supply was the core of the problem in pulses.
India produced 15.11 million tonnes of pulses in 2007-08 and after accounting for wastage and seeds, the total availability was 12.84 million tonnes.
Against this, the demand was 16.77 million tonnes. “There is a gap of 3-4 million tonnes,” he said.