Union Finance Minister Pranab Mukherjee said Indian economy is on the path of recovery and would soon go back to the robust growth rate of around 9% average.
Addressing the Finance Secretaries/Finance Commissioners of States and Union Territories after inaugurating their 2nd Annual Conference here on Monday, Mukherjee said: ?The recovery, which spans all three sectors, viz., agriculture, industry and services, is estimated at 8.8% in the first quarter of current financial year 2010-11.?
Commending the efforts of Centre as well as the State Governments for providing necessary stimulus to the economy, he said: ?the recovery is in line with growth projection of 8.5 ? 0/25% in 2010-11.?
Stating that inflation is a major area of concern, Mukherjee said that the Government has taken a number of anti-inflationary measures to bring down the rate of inflation which has moderated to 8.6% in September, 2010 from the headline inflation of 11% at the beginning of the current financial year.
He said that the Central Government has requested the States to strengthen their public distribution systems to ensure that the vulnerable groups of the society are not adversely affected by the current level of inflation.
The Minister asked State Finance Secretaries to take appropriate steps in this regard to bring down the inflation at more acceptable levels.
Mukherjee said: For the years 2011-12 and 2012-13, we have projected fiscal deficits of the Centre to further reduce to 4.8% and 4.1% of GDP respectively.?
?The debt stock of the Centre is also projected to come down to 48.2% of GDP by the end of 2012-13 as per the Medium Term Fiscal Policy Statement, 2010-11. This is in line with the recommendations of the 13th Finance Commission,? he added.
Reiterating the commitment of the Central Government to its path of fiscal consolidation, Mukherjee hoped that the States will also remain committed to their fiscal roadmap.
The Finance Minister said that the 13th Finance Commission has mandated that fiscal deficits of the states should come down gradually to 2.4% of GDP i.e. 3% of GSDP by the end of the award period.
He said the Commission has also projected that the debt stock of the States will consequently reduce to 24.3% of GDP.
The Finance Minister hoped that the States will bring in necessary fiscal reforms to achieve these targets.
Mukherjee said that the 13th Finance Commission has recommended grants-in-aid to States amounting to Rs. 3,18,581 crore over its award period.
He said that the Government of India has issued guidelines for most of these grants starting from current year and he would expect the States to be able to avail the grants in a timely manner and benefit from them.
The Minister said that one of the crucial aspects of financial inclusion is providing banking services in unbanked blocks.
He said that at present, there are 88 unbanked blocks of which 80 are in North Eastern states, 4 in Jammu & Kashmir and 4 in Jharkhand.
He requested the State Governments to provide assistance in terms of necessary infrastructure, connectivity and security services.