India's Mukherjee Sees Signs of Reviving Growth Ahead of Budget

May 26 (Bloomberg) -- India's Finance Minister Pranab Mukherjee said there are indications of a revival in economic growth, adding that he will use next month's budget to build on the recovery.

Mukherjee said enough money must be made available for construction of roads, ports and other infrastructure, besides addressing the problems of exporters hit by the global recession. He was speaking in an interview in New Delhi today with CNBC TV18 news channel.

India's key Sensitive stock index has jumped 12 percent since Prime Minister Manmohan Singh won a re-election on May 16 on investor optimism the mandate will help the government pursue policies for growth. Mukherjee said he acknowledged people's expectations and will work with Singh to draft the budget.

"We will do whatever is appropriate for the economy," Mukherjee said, without providing details of his plans. He said the government will unveil the budget for the current financial year in the first week of July.

The 73-year-old Congress party veteran was appointed finance minister last weekend, a position he has been acting in since January as Singh, 76, recovered from surgery. He held the defense and then the foreign portfolio for the bulk of Singh's first term.

Mukherjee is returning to the finance ministry after a quarter of a century. As the finance minister in Indira Gandhi's cabinet from 1982 to 1984, he ran an economy that was almost closed and insulated from global economy.

Election Victory

Singh's Congress party has the support of 322 lawmakers in the lower house of parliament, with the party getting 206 lawmakers of its own. That's the most since 1991, when Singh as finance minister abandoned Soviet-style state planning and introduced free-market policies that have helped India's economy quadruple in size.

India's economy may slow to 7 percent in the year ended March 31, Mukherjee said, buffeted by the global recession.

The fiscal stimulus announced by the government since December to prop up growth has widened the budget deficit to 6 percent of gross domestic product at the end of March 31, 2009, from a target of 2.5 percent of GDP.

The government needs to stimulate growth while reining in the budget deficit, Mukherjee said today, adding there's no schedule for curbing the shortfall.

To contact the reporter on this story: Cherian Thomas in New Delhi at Cthomas1@bloomberg.net .