Amid woes, Pranab boasts about Indian economy's 'resilience'

Pranab Mukherjee with the 2011 batch of Indian Economic Service (IES) Officers, in New Delhi on May 23, 2012.

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SME Times News Bureau | 24 May, 2012
Amid growing concerns about the economy, particularly the Indian rupee's ongoing weakness, Union Finance Minister Pranab Mukherjee Wednesday expressed his faith in the resilience of the Indian economy.

We will be able to overcome successfully the difficulties presently facing the Indian economy so as to get it back to the path of higher growth trajectory, Pranab said addressing the officers of Indian Economic Service of 2011 batch in New Delhi.

Giving a brief overview of the Indian economy, the Finance Minister added that though the present trends are not very encouraging yet the service sector is doing well and agricultural growth is also expected to be good on account of expected good monsoons.

On Wednesday, the rupee closed at 56.01 against the dollar, having hit a fresh all-time low of 56.22 during the day.

On the same day, the Centre announced hike in petrol prices by an unprecedented over Rs.7 a litre. The hike will range between Rs.7.54 and Rs.7.98 in the four metros and would be higher or lower in other cities depending on the extent of taxes.

The increase had become inevitable with the continued slide of the rupee's exchange rate, resulting in rising oil import oil bill. The quantum of India's oil imports is substantial at around $160 billion to $170 billion annually.

Over the last week or so, Asian currencies have been hit primarily because global investors are becoming more risk averse as they worry about the fate of the Eurozone.

However, the Indian rupee has had a steeper fall, largely because of weak macroeconomic fundamentals driven by low growth, high inflation, tight liquidity, high interest rates, high fiscal deficit and high trade deficit.

Exporters body FIEO has demanded that the Centre and the RBI should take some urgent measures, particularly direct selling of US dollars to oil companies and issuance of attractive bonds, which, according to it, can be helpful in arresting the fall.