New Delhi: Fearing further moderation in economic growth in the next fiscal, the Government on Friday said it would take more steps to boost the labour-intensive sectors.
“As next year’s outlook is more downbeat... the government will take further steps to ensure that the labour- intensive sectors are less adversely affected,” External Affairs Minister Pranab Mukherjee, who is currently holding charge of the finance portfolio, said while addressing a conference on financial crisis.
He further said despite the global economic downturn, India’s economy is expected to grow at 7% in 2008-09, after recording an average growth rate of 9% for the last five years.
The government, the minister pointed out, has already taken a “number of measures to inject liquidity, bring down the cost of borrowing and stimulate demand”.
Referring to the need of a regional mechanism to prevent deepening of the crisis, the minister said, “We, in Asia, have the capacity to undertake significant counter-cyclical steps to drive the economy forward on the strength of domestic demand”.
Mukherjee further said as a fallout of the current economic crisis, the structure of the global economy would change and have far-reaching implications for the future governance of the world.
“The structure of global economic governance would need to be changed profoundly with major developing economies having a say in it,” he said, adding that the failure to do so would result in new investment barriers and global market fragmentation.
Also, he added, a greater economic co-ordination would be needed at both regional and global level to achieve movement of capital. “The aid and trade flows to the developing world must be maintained,” he added.
The minister also emphasised that global financial institutions need to mobilise more resources for building rural economies of developing countries.
“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,” Mukherjee said.
About economic growth, Mukherjee quoted an IMF report to point out that growth rates in the developing world would remain positive, though the developed nations would experience a contraction by 2% — first time since the second world war.