Pranab seeks out allies, opposition for economy

New Delhi: Finance Minister Pranab Mukherjee said on Saturday the government needs to take some difficult decisions such as capping subsidies and controlling expenditure to bring down the fiscal deficit in the next few months to get the Indian economy back on the growth track.

"We cannot go on with the approach that is divorced from the reality. Difficult decisions will have to be taken in the coming months," Mukherjee said as slowing growth and policy inaction over crucial reforms inhibit the nation's financial prospects.

"I cannot ignore the ground reality that mere announcement of decisions, if it cannot be pursued, is serving no purpose as it happened in the past," he said at an interaction organised by Federation of Indian Chambers of Commerce and Industry (FICCI).

The minister hinted that the government would have to drive a hard bargain with all political parties and other stakeholders keeping the current political climate in view.

Mukherjee said the situation today was quite similar to that in the 1990s when there was no clear majority for any party.

"If we could face the challenges then, there is no reason why we cannot face them now."

On FICCI president R.V. Kanoria's comment that the industry would like to see a change of policy from one of policing to that of trust, the minister said: "Let me assure you that there is no trust deficit and without the cooperation of industry, the larger political establishment and civil society we cannot be equal to the gigantic task at hand."

Mukherjee said he was committed to his budget proposals and expressed confidence that the fiscal and other reform measures could be taken forward.

He said business confidence would improve with the interest rates coming down. "Core inflation has moderated in the past three months and in the coming months we are looking at reversal of the policy rate which should help in improving business sentiments."

On the time-frame for implementing the goods and services tax (GST), Mukherjee said the decision did not depend on him and a two-thirds majority in both houses of parliament was needed.

"Subsequently, a minimum of 15 out of the 28 states will have to ratify the proposal."