I have taken a risk to return to higher growth rates: FM

Finance minister Pranab Mukherjee today said he had taken a "tremendous risk" to return to higher growth rates by opting for a higher deficit and hoped to achieve 9% growth in the next fiscal year.

"I have taken the tremendous risk to create the fiscal space of having higher deficit," Mukherjee told Doordarshan's Lok Sabha TV channel soon after presenting the Union budget in Parliament. "I could have gone for the more conservative way of reducing the deficit and [contented] myself with 6 or less than that percentage of growth."

Mukherjee said he had taken the risk as he felt that the priority would be to return to a higher rate of growth. "Today, India is on the regular path of high growth. Of course, there has been a dip this year and next year I do hope we will make up some, but another year we will come back to 9% growth because basic fundamentals [sic] are strong and resilient," he said.

Mukherjee said the rate of growth will not be less than 7%.

Asked about achieving 9% growth in the next financial year, he said, "It may not be immediately in the next financial year, but my target is to reach there as fast as possible, at least 8.6% if not 9%."

Mukherjee said the focus of the budget was to step up spending in rural and urban infrastructure programmes and provide tax concessions to the corporate sector.

He said to help exporters, necessary relief has been provided by extending the sunset clause.

Asked about the fall in the stock markets after the budget announcements, Mukherjee said perhaps the market expected too much from the finance minister at one go.

"Last month there was a lot of hype," he said. "In the expectation, people forget the reality. Perhaps the markets expected too much from the finance minister to do at one go."

Mukherjee said he had made it clear at the beginning of his speech that one budget will not address the problem.

He said Indian exports will pick up even if there is a slight improvement in the international economic scenario.

On divestment, Mukherjee said he had outlined the philosophy of the process in his budget speech as it was not possible to make announcements in the speech.

Mukherjee indicated continuance of the practice of the government controlling the prices of petroleum products, saying he favoured stability.

"Earlier, we had left it to oil-marketing companies," he said. "The oil-marketing companies used to change it [the prices of petroleum products] very frequently.

"I want some amount of stability. Total stability is not possible when three-fourths of our requirements are subject to the vagaries of international fluctuations."

Mukherjee said the government had come out with three stimulus packages in the wake of the global financial crisis in the form of fiscal concessions, public expenditure, and reduced interest rates.

"I have not gone back on the concessions we have given," he said.

Mukherjee said he expected "some turnaround" in the third quarter of the current financial year, but if there is no visible improvement in the international scenario then "it may take some more time".

On tax reforms, he said, "First thing that I would like to do away with is the plethora of exemptions. I would like to make the tax law simple."

"Rate of taxes will be low, voluntary compliance will be more. Returns submissions would be simple, Saral-II form, I have asked them [finance ministry officials] to work on it."