Ahead of the interim budget, External Affairs Minister Pranab Mukherjee, who is also holding the finance portfolio, made a case on Thursday for stimulating domestic demand and boosting external trade to combat the economic slowdown and fight poverty.
"There is a need to sustain our foreign trade, revive foreign investments and generate domestic demand in order to maintain our growth rates," said Mukherjee, who is slated to present the interim budget in the Lok Sabha on Monday. Boosting the economy, he added, was also necessary to "uplift multitudes living below the poverty line."
Noting that the country cannot remain immune to the impact of the global crisis, Mukherjee said, "India faces special challenges from the international financial crisis... we have to address this on many fronts."
Mukherjee also expressed satisfaction that, in such a time, India would grow by 7 per cent during 2008-09.
The government came out with two stimulus packages in the recent past and according to Planning Commission Deputy Chairman Montek Singh Ahluwalia, there is a need to continue the stimulus efforts in the next fiscal.
Continuing the initiatives to boost the economy, the government on Wednesday announced a package for the media industry by abolishing duties on importing newsprint.
Quoting projections of the International Monetary Fund, Mukherjee said, "Advanced economies of the world would shrink by 2 per cent in 2009. While the US economy will contract by 1.6 per cent, the euro zone economy will decline by 2 per cent and Japan by 2.6 per cent in 2009."
The Central Statistical Organisation earlier this week in its advance estimates indicated that the economy would grow by 7.1 per cent during 2008-09, against 9 per cent recorded in the previous fiscal.
Mukherjee's statement on stimulating the economy assumes significance in view of the 2 per cent contraction in industrial output in December. This was the second month in the current fiscal when industrial growth turned negative. Earlier, contraction in industrial output was witnessed in October, after a gap of 15 years.
Describing the global financial meltdown as an unprecedented crisis, Mukherjee called for "crafting a new international economic order to put the global economy on (a) sound footing." On India's role, he said the country remains committed to working with foreign partners, including the G-20, for devising a new financial architecture.