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Budget aims to tame inflation: PM

Last updated on: February 28, 2007 14:31 IST

Prime Minister Manmohan Singh on Wednesday termed the budgetary proposals for 2007-08 as anti-inflationary, which aimed to control prices through reduction in excise duty on many items.

"The Budget certainly has the anti-inflationary effect," he told reporters, adding the government had moved forward with its fiscal consolidation and deficit reduction programmes.

"We are moving in that direction," he said adding the steps taken in the Budget should provide the assurance that "inflation will not be allowed to get out of hand".

The prime minister said the government had targeted a nine per cent GDP growth during the 11th plan that is aimed at speeding up development.

The Prime Minister made it clear that the government will not hesitate to import essential items in case there were domestic supply constraints.

He said during the current year the government imported 55 lakh tonnes of wheat besides importing vegetable oil.

Reaffirming the government's commitment on enhancing spending on social infrastructure, the Prime Minister said a lot of focus had been given on education and healthcare.

He said the budget sought to lay emphasis on improving access to social services and social safety net.

"Education and healthcare are the primary imperatives as fas as this budget is concerned," Singh said.

He said there was a need to improve the skill level and special emphasis was being laid on secondary education.

The Prime Minister said emphasis is on "supply side responses" and the National Programme of Pulses, Ground Water Resources and the strengthening of Rain-Fed authority should give a new momentum in this direction.

"We can import commodities which are in short supply," he said.

The prime minister said the toning up of rain-fed authority was aimed at utilisation of the water particularly for dry land agriculture.

Singh said the budget aimed at fiscal consolidation through reduction of excise and custom duties in a number of commodities. "This will certainly bring up the anti-inflationary bias of the budget," he said.

The prime minister said the expectation of the masses on the direct tax had been taken care of and the threshold exemption limit had been raised by Rs 10,000.

To remove resource constraints for the core sectors, the prime minister said the government was considering utilising a part of the foreign exchange reserve for infrastructure development and this was being discussed with the Reserve Bank of India.

"We are toying with the idea of utilising foreign exchange reserves for infrastructure development. Things are under discussion with the RBI in this regard," he said.

"This will materialise in due course," Singh said.

He said the government planned to extend the National Rural Employment Guarantee Scheme to 330 districts from the current 200 districts.

He also said the budget proposed a new life insurance programme for landless workers.

"We need to strengthen the impulses to expand investment in infrastructure," Singh said.

Observing the need for vocationalisation of education, he said there was a need for expanding the facilities that were available through the medium of ITIs.

"The Finance Minister mentioned modernisation of 500 ITIs and he also mentioned 1,400 additional ITIs which need to be modernised. The focus is on improving the skill level of our young people," Singh said.

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