Hinting at some tough measures in the coming days, Finance Minister P Chidambaram today said some "bitter medicine" is necessary to restore the health of the economy and get back to high growth path.
"Some bitter medicine has to be taken this year. We have to take some bitter medicine. There is no other way...this bitter medicine is good medicine. It will restore the health of the economy and next year we can look forward to much higher growth," he said.
Chidambaram was winding up a discussion on the first batch of supplementary demands for grants in the Lok Sabha.
After growing at over nine per cent, the GDP slipped to nine-year low of 6.5 per cent in 2011-12 and during the current year, as per the RBI projection, is estimated to be
5.8 per cent. The Finance Minister also expressed confidence that inflation, which has continued to remain a concern and a challenge, would moderate in the next two to three months. "Inflation is a challenge. Inflation worries the government. While CPI inflation is sticky, good news is that WPI inflation seems to be trending downwards...If it trends downwards, there will be some reason for comfort," he said.
The WPI inflation, which is based on movement in wholesale prices, moderated to 7.24 per cent in November from 7.45 per cent a month ago. The retail inflation, however, was at 9.9 per cent in November, up from 9.75 per cent in October.
Later, amid walk out by BJP and Trinamool Congress, the Lok Sabha passed the first batch of supplementary demands for grants that seek to raise government expenditure by Rs 32,120 crore in 2012-13.
Of the total cash outgo of Rs 30,804 crore, Rs 28,500 would be towards oil subsidy and Rs 2,000 crore for rehabilitating Air India.
Chidambaram said there have been several setbacks to the turnaround plan of Air India and the government needs to infuse funds to prevent the private air carriers to jack up fares.
"If I do not provide this Rs 2,000 crore (to Air India) there will be greater difficulty ... If AI is not kept afloat, what will happen is airfares will go up, other airline
companies will simply push up their airlines because so many seats will not be available," he said.
He said the government is committed to get back to the path of fiscal consolidation and to avoid downgrading by various rating agencies.
"If we do not succeed in fiscal