New Delhi: Finance Minister Pranab Mukherjee on Saturday said that the global economic situation was indeed grave and that India was witnessing a slump, however, the country was capable of coming out of it.
"India has emerged as one of the fastest growing economies in BRICS (Brazil, Russia, India, China and South Africa). In both my tenures as Finance Minister, I entered at the time of an economic crisis. We are indeed passing through difficult times that is not merely confined to India but envelops the world.
"Despite slow growth of 6.5 per cent, India has marched as the second fastest economy in BRICS. There are difficulties, there is slow growth... high deficit... current account deficit is of grave concern, inflationary pressures are there... There is negative sentiment in the investment sector."
He added, "We have to take note of areas of difficulties and find out our own ways to come out of the difficulties. We are competent enough to meet the grave challenges and come out victorious."
He further said, "As Finance Minister, I don't dismiss the economic concerns put forth by credit rating agencies. We are in a difficult situation but this disadvantage can be converted into advantage.
"There has been depriciation in Rupee. Eurozone crisis is a matter of concern... We are worried about the Greece election results on June 17. The UK is on the brink of recession. Even China has entered a higher rate of inflation compared to their rivals.
"Fortunately, after 22 months, oil prices have started comming down. We can reduce our import bills because of low crude oil prices."
Pranab further said, "Our approach should be to stimulate the domestic demand driven strategy. Our problems are to be sorted out by ourselves. Our GDP growth of about 9.5 per cent was achieved and we should move up... but because of the situation, over which we do not have complete control, we have to have the courage to come out of it... By working collectively, we could come out of the first financial crisis of 2008-2009.
"We have to take necessary steps by removing the supply constraints.. The problems are not repetitive... Food inflation has not been controlled as demands for other food items like milk, egg etc has increased and we have to address to this demnad... I am confident that the RBI will adjust the monetary policy just like the fiscal policy.
"In case of petroleum products, 50 per cent of the cost the retailers pay comes from the state taxes. I have suggested to states that if they agree to reduce the tax burden temporarily, the Union government will be able to reduce the subsidy to some extent. When there are difficulties, the burden has to be shared by all. If the burden is put on only one, that is the Centre, the problem will increase."
Pranab said, "There is a need to create rapid awareness amongst people to take advantage of the credit policy available to them. We need to ensure that each family opens at least one bank account. Steps should be taken to make possible electronic transactions without charges and the banking should be based on the needs of the people."