Day after budget, Mukherjee warns of challenges ahead

NEW DELHI - A day after presenting the federal budget for the next fiscal, Finance Minister Pranab Mukherjee said the country continued to face both internal and external challenges, like spiralling oil prices, and must remain ever so vigilant.

“The challenge before the government and the Reserve Bank of India has been to support the growth process without compromising on price stability,” the finance minister told the annual meeting of the Federation of Indian Chambers of Commerce and Industry Tuesday.

The task has not been easy, but we are making progress.”

The finance minister also warned that there was the possibility of rising global commodity prices adding to domestic inflationary pressures, which has pushed headline inflation to over 8 percent, and added: We are already confronting such a situation.”

In a bid to ensure growth while maintaining price stability, he stressed on the revival of private investment, fiscal consolidation and supply side responses from the farm sector to improve the availability of food.

Mukherjee, who last month had attended a crucial meeting of G20 finance ministers in France, said there were no clear signals that the euro zone debt crisis would not spread over to other economies, especially in Europe.

“I am not confident from the recent G20 finance meeting that the European sovereign debt crisis will be contained,” he said. “I did not get any convincing answers — still a question mark.”