Pranab denies stimulus was root of present economic crisis

President Pranab Mukherjee has sought to counter criticism against the economic stimulus provided when he was the Finance Minister in 2009 and maintained that economy under him registered high growth rates.

Seeking to debunk criticism that the stimulus was responsible for high fiscal deficit and depreciation of rupee, he told Euronews, "...like most other countries we provided stimulus package to ensure that fastest sliding down of the GDP growth leading to unemployment could be arrested.

"In India we got temporary relief because in the year, from 9 per cent GDP growth we had registered a 6.7 per cent (2007-08). But, Mukherjee said, in the remaining two years, India registered high growth of 8.7 per cent (2009-2010) and 9.3 per cent (2010-11). But again from the third year it started sliding down.

India's economic growth rate slipped to 6.2 per cent in 2011-12 and to a decade's low of 5 per cent a year after. In the first quarter of the current financial year it was 4.4 per cent. According to Asian Development Bank's latest projection the growth rate could fall to 4.7 per cent in 2013-14.

Mukherjee said that when he took over as Finance Minister in January 2009 the impact of the global financial crisis was being felt on India.

Observing that his immediate task was to deal with the ensuing economic problems, he said, "Indian GDP was growing at a fast rate of around 9 per cent plus. But when I took over I found out that there was on a fortnightly basis sliding down of the GDP growth."

In order to deal with the global crisis of 2008, he said, the then US President George Bush called the first G20 summit and there was broad consensus that countries should provide stimulus to address the economic woes.

From the hindsight, Mukherjee said, the people did not understand the depth of the crisis at that point of time. "Frankly speaking, we could not recover from that shock. I am not talking of India but also the whole world."

On the need for more reforms, Mukherjee said, "we shall have to also keep in mind the size of Indian population, the level of uneven development...in India, we cannot afford to adopt that model (of developed countries) because I have to feed 1.2 billion plus people.

"...our development strategy to some extent will have to be country specific as we do believe each and every country has specific problems which ought to be addressed in the context of the socio-economic conditions prevailing in that region."

Replying to questions on the long-pending free trade pact between India and European Union, Mukherjee said, "large number of areas of agreement we have reached. There are only a very few areas of differences.

"We should narrow down those differences and this Comprehensive Economic Partnership Agreement should be concluded so that we can get benefit."

Several rounds of talks have taken place between India and EU over the free trade agreement which has been pending since 2007.