Pranab calls for innovative remedies to deal slowdown, inflation

Union Finance Minister Pranab Mukherjee on Thursday called for "innovative remedies" to deal with challenges of economic slowdown and high inflation.

"Options today are much more limited. The options for fiscal steps as well as monetary measures are increasingly becoming limited. However, there is potential for policymaking in other areas," he said at the Delhi Economics Conclave.

"Innovative remedies would be required to address these challenges simultaneously", Mukherjee who is leader of Lok Sabha added before to rushing to Parliament on Thursday.

He recalled that in recent months, the government has sought to unlock economic bottlenecks through initiatives such as the National Manufacturing Policy, permitting greater FDI in retail sector, Direct Taxes Code, Goods and Services Tax, and various legislations including in the financial sector.

Pointing out the challenges facing the country are daunting, Mukherjee said: "The primary challenge is of human development, where India still ranks low in global terms, particularly in critical areas such as infant and maternal mortality, nutrition, and literacy. India cannot afford to relax on its efforts to promote growth and to leverage the fruits of that growth for fostering more equitable and inclusive development".

He also admitted that the fight against inflation and tight monetary policy regime were hurting growth and investment, the minister said the "slowdown in industrial growth is of a particular concern, as it impacts employment".

In addition, inflation is at an unacceptable level and "there are also immediate concerns relating to fiscal deficit and current account deficit", he said.

India is likely to clock economic, or GDP, growth of around 7.5% this fiscal, as against 8.5% in the previous year.

India Inc has been complaining that the tight monetary stance of the Reserve Bank is impacting investment and industrial growth.

All eyes are now on the RBI's scheduled review of the monetary policy on Friday. It has hiked interest rates 13 times since March, 2010, in its bid to tame inflation.