Finance Minister P Chidambaram on Friday said if policy rates were to be adjusted to tackle the country?s high inflation, it would have a bearing on growth. In his first interaction with a newspaper after winning the trust vote, Chidambaram said there would obviously be a trade-off between growth and inflation.
?We all know that. The industry chambers know that. But, what we are trying to do is balance it to the extent possible. But I have already said inflation control is top priority. So, for that purpose, if we have to sacrifice a bit of growth, so be it.?
The finance minister said despite the 12% inflation rate?a 13-year high?GDP would grow at between 8% and 8.5% in the current fiscal. Admitting it was a difficult year, he said, industry might moderate to a level that should not cause too much distress. But he expected agriculture and the services sectors to perform well.
?However, it will be a year when growth will be accompanied by inflation. The effort is to moderate inflation from now over the next six months,? Chidambaram said.
Acutely aware of the thin majority that the UPA government has in the Lok Sabha, he said he was willing to approach and talk with the BJP, the principal opposition to the Congress, to ensure that crucial financial sector legislation that has been stalled for some time is passed by Parliament.
?I intend to reach out to every section in Parliament, including the BJP, and seek support on the economic agenda spelt out in my past Budgets.? At least three pieces of legislation?the Banking Regulation (Amendment) Bill, Pension Fund Regulatory & Development Authority Bill and the SBI (Amendment) Bill?are pending in Parliament.
For its part, the BJP on Thursday said it would consider supporting the government on economic reforms. ?If PM Manmohan Singh himself takes the initiative and contacts Opposition leader LK Advani with specific proposals, the party will examine them,? BJP leader and former finance minister Yashwant Sinha had said.