Govt. keen to attract domestic, foreign private sector investment: Mukherjee

New Delhi - Finance Minister Pranab Mukherjee on Tuesday said the government is committed to creating a conducive policy environment to attract both domestic and foreign private sector investment.

Delivering his speech at Annual General Meeting and National Conference of CII, Mukherjee said: "To facilitate private sector investment, the government initiated several policy measures during the last financial year. The notification of guidelines for setting up the Infrastructure Debt Fund was issued and the external commercial borrowings (ECB) policy was liberalized further. The Government also put in place the New Manufacturing Policy."

"To keep up the tempo, I have announced several other initiatives in my current Budget speech. For instance, the scope of viability gap funding would be extended to some more sub- sectors and a harmonized list of infrastructure has been notified to remove ambiguity," he added.

Mukherjee said the Budget for 2012-13 estimates the fiscal deficit to come down to 5.1 percent of GDP.

"On the fiscal front, the revised estimates for 2011-12 placed the fiscal deficit at 5.9 percent of GDP. The Budget for 2012-13 estimates the fiscal deficit to come down to 5.1 percent of GDP. The Medium Term Fiscal Policy Statement 2012-13 places the fiscal deficit at 4.5 per cent and 3.9 per cent respectively in the next two years," said Mukherjee.

"Thus the medium term fiscal stance is firmly on the fiscal consolidation path with the revenue deficit sought to be eliminated in 2014-15. Gross outstanding liabilities of the Centre are estimated to decline from 45.7 per cent in 2011-12 (RE) to 41.9 per cent in 2014-15," he added.

Stating that there are some concerns about the fiscal deficit target for the current financial year, Mukherjee said: " Let me assure you that the budgetary exercise has been done with due diligence and I would do my best to restrict the government expenditure to the budgeted figures. Yet let me repeat again that the Government will not compromise on funds towards the schemes targeted to achieve the UPA Government's agenda of inclusive growth."

"The Government is committed to the agenda of inclusive growth and accordingly I have duly provided for all flagship schemes targeting the poorest of the poor. The Government is coordinating the Socio-Economic Caste Census (SECC), which is the administrative identification for the process of delivery under various developmental schemes. After this is available, the eligibility and entitlements of the rural households for the central schemes will be determined," he added.

Mukherjee said with moderation in inflation there should be reversal in the policy rates by the RBI, which could encourage investment activity.

"Indeed, the monetary policy review is slated for later today. As fiscal consolidation gets back on track, savings and investment should also increase. These factors, along with the fact that despite a slowdown, India's investment rate has been 35.1 percent in 2010-11, should help in the consolidation of growth," said Mukherjee.

"There are some downside risks, in particular the implications of the continued stickiness in global oil prices. We will have to take the necessary steps to minimise their impact in the coming months," he added.

Mukherjee said the global economic recovery has been slow and somewhat uncertain.

"Post meltdown in 2008, recovery is turning to be harder than anticipated and it may take longer time to gain traction. Globally, for policy makers this is one of the most challenging phases. Major investors the world over are concerned despite the fact that several steps have been taken by many debt ridden countries with the help of other economic partners to salvage themselves from the crisis," said Mukherjee.

"Apart from soaring debt to GDP ratios, unemployment and high commodity prices are issues that continue to engage the policy attention. I am looking forward to the revised global growth projections of the IMF in its latest World Economic Outlook (WEO), which is due anytime and I am hoping that there would be something cheerful for the global recovery," he added.

Mukherjee further said slowdown in external demand has led to deceleration in the growth of exports in recent months with the current account deficit widening to over 3 per cent of GDP.