ID :
189248
Fri, 06/17/2011 - 13:58
Auther :
Shortlink :
https://www.oananews.org//node/189248
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Tight monetary policy may impact growth: Pranab
New Delhi, June 17 (PTI) Admitting that the Reserve
Bank's anti-inflation monetary measures may impact growth,
Finance Minister Pranab Mukherjee on Friday said the major
challenge right now is to contain price rise.
"The monetary policy has been gradually tightened...
Monetary measures may end up moderating the growth if they
have to be persisted for an extended period of time,"
Mukherjee said at an Assocham meet here.
However, he said in the short-term, moderating aggregate
demand is critical to check inflation, which is "our major
challenge".
The RBI yesterday hiked key policy rates for the tenth
time since March, 2010, in a bid to tame inflation, which
crossed the 9 per cent mark in May.
Inflationary pressures persist both from higher global
commodity prices and domestic structural demand-supply
imbalances in several commodities.
Mukherjee said while inflation has implications with
respect to sustaining the growth momentum, the drivers of
economic expansion remain intact.
"... The growth drivers of the economy remain broadly
intact," he said, adding, "I am so far hopeful that we should
be able to repeat the growth performance of 2010-11 in 2011-12
as well," he said.
In 2010-11, the country's GDP is estimated to have grown
at the rate of 8.5 per cent.
Mukherjee said as the government gears itself up for the
task of preparing the 12th Five-Year Plan (2012-17), "We need
to aim at a GDP growth of 9 to 9.5 per cent for the Plan
period."
For this much expansion in GDP, the country's economy
must grow at an average rate at least one percentage point
higher than the 8.2 per cent rate likely to be realised in the
XII Plan.
On the financial inclusion required to promote the agenda
of inclusive growth, Mukherjee said it is a major challenge
before the banking sector and financial system at large.
"Newer perspective and strategies toward financial
inclusion are needed to reach the un-banked and the
under-banked sections of our country," he said.
While applauding the banking sector on their performance
with respect to growth in deposits and net profits, Mukherjee
expressed concerns on their "asset quality".
During 2010-11, non-performing assets (both gross and
net) increased from the levels witnessed in the previous year.
"It is important for the banks to constantly monitor and
bring down the NPA to the previous level," he said.
He also asked the banks to go for more innovation and
come up with value-added offerings to meet the growing needs
of customers.
He further said the government was in the process of
deepening policy reforms in the financial sector and
addressing gaps in overall economic regulatory architecture.
A Financial Sector Legislative Reforms Commission has
been set up to re-write financial sector laws.
He also sought the support of all political parties for
passage of the Direct Taxes Code (DTC) and Goods and Services
Tax (GST) Act, considered to be the most important tax reforms
in the country, in Parliament.
Bank's anti-inflation monetary measures may impact growth,
Finance Minister Pranab Mukherjee on Friday said the major
challenge right now is to contain price rise.
"The monetary policy has been gradually tightened...
Monetary measures may end up moderating the growth if they
have to be persisted for an extended period of time,"
Mukherjee said at an Assocham meet here.
However, he said in the short-term, moderating aggregate
demand is critical to check inflation, which is "our major
challenge".
The RBI yesterday hiked key policy rates for the tenth
time since March, 2010, in a bid to tame inflation, which
crossed the 9 per cent mark in May.
Inflationary pressures persist both from higher global
commodity prices and domestic structural demand-supply
imbalances in several commodities.
Mukherjee said while inflation has implications with
respect to sustaining the growth momentum, the drivers of
economic expansion remain intact.
"... The growth drivers of the economy remain broadly
intact," he said, adding, "I am so far hopeful that we should
be able to repeat the growth performance of 2010-11 in 2011-12
as well," he said.
In 2010-11, the country's GDP is estimated to have grown
at the rate of 8.5 per cent.
Mukherjee said as the government gears itself up for the
task of preparing the 12th Five-Year Plan (2012-17), "We need
to aim at a GDP growth of 9 to 9.5 per cent for the Plan
period."
For this much expansion in GDP, the country's economy
must grow at an average rate at least one percentage point
higher than the 8.2 per cent rate likely to be realised in the
XII Plan.
On the financial inclusion required to promote the agenda
of inclusive growth, Mukherjee said it is a major challenge
before the banking sector and financial system at large.
"Newer perspective and strategies toward financial
inclusion are needed to reach the un-banked and the
under-banked sections of our country," he said.
While applauding the banking sector on their performance
with respect to growth in deposits and net profits, Mukherjee
expressed concerns on their "asset quality".
During 2010-11, non-performing assets (both gross and
net) increased from the levels witnessed in the previous year.
"It is important for the banks to constantly monitor and
bring down the NPA to the previous level," he said.
He also asked the banks to go for more innovation and
come up with value-added offerings to meet the growing needs
of customers.
He further said the government was in the process of
deepening policy reforms in the financial sector and
addressing gaps in overall economic regulatory architecture.
A Financial Sector Legislative Reforms Commission has
been set up to re-write financial sector laws.
He also sought the support of all political parties for
passage of the Direct Taxes Code (DTC) and Goods and Services
Tax (GST) Act, considered to be the most important tax reforms
in the country, in Parliament.
