| World Economic Forum co-chief executive Jose Maria Fiqueres (right) puts a question to finance minister Jaswant Singh (left) during the inauguration of the India Economic Summit 2003 in New Delhi on Sunday. (AFP)
New Delhi, Nov. 23: Finance minister Jaswant Singh today set the tone for the budget by saying he would present a growth-boosting document that ensures food security and keeps the inflation rate within 4 per cent.
In his keynote address at the India Economic Summit, organised by CII and the World Economic Forum, he said the fiscal deficit and interest rates were the two areas that posed a daunting challenge for now.
“My fiscal deficit continues to worry me. We also need to strike the right balance on interest rates because we need to make it competitive enough for our own entrepreneurs,” he added, lauding states for showing a sense of restraint and responsibility in their financial affairs.
On inflation, the minister said it would be benign at 4 per cent, though he expected it to decline further in future. Underscoring the need for a second green revolution, Singh explained how food processing and waste management would be the key to achieving this goal.
Singh painted a rosy growth forecast for the current fiscal, his optimism underpinned by the good monsoon and an upturn in industrial production. “The economy is fast approaching a point of criticality. I do not know when it will happen but it will happen very soon. When it happens, growth will be explosive.”
The minister pointed to the feel-good factor sweeping the economy, saying a spending spree by customers would propel the economy into a high-growth orbit. “In the overall management of money, I would like to give plenty to my countrymen. It will give a boost, both to production and purchasing power.”
Reaffirming his commitment to financial sector reforms, Singh said: “Banking, insurance and reinsurance are amongst the few important areas to be looked at. But I need to have Parliament with me on it.”
He indicated at the new guidelines, which would be issued shortly to raise foreign direct investment in the banking sector to 74 per cent from the present 49 per cent.
The government was also contemplating passage of the Banking Regulation Bill by Parliament to make voting rights proportionate to shareholding pattern of a foreign partner.
On the hardening rupee and its effect on exports, Singh said the government did not anticipate moves to rein in the currency. “The rupee has shown certain degree of strength only against dollar and not against euro or other hard currencies.” He advised exporters to switch to euro instead of sticking to dollars.
Admitting that there was some setback to reforms, especially divestment, after the Supreme Court judgement on HPCL and BPCL, he said such things do happen in a democracy. However, the government is committed to the selloff process and to move away from public sector enterprises that are a drag on the economy.
The manufacturing sector would continue to receive the fillip from the government. “Indian companies have demonstrated results which can be the pride of my country. We have to reach out to the world, especially in pharmaceuticals and biotech.”