Tuesday, May 24 2005 16:55 Hrs (IST) - World Time -

Mumbai: Stating that Government borrowings would be less than what was projected for the current fiscal, Union Finance Minister P Chidambaram today (May 24, 2005) said there was pressure on inflation due to rising oil prices and money supply.

"The Government borrowing is a problem with high gross fiscal deficit. We would borrow less than projected due to better management of cash flows," Chidambaram said while addressing an annual general meeting (AGM) of Bombay Chamber of Commerce and Industry (BCCI) in Mumbai. If people pay taxes promptly that will also help the situation, he said.

"There is pressure on inflation front due to money supply," he added.

Chidambaram expressed concern over the high gross fiscal deficit of both the Centre and States which was unacceptedly high and said, "Both Prime Minister and I are confident that we will do better this year."

He said India needed sensible policies including containing inflation, keeping the interest rates benign and promoting investment for next 15-20 years if it has to emerge an economic super power.

Coming down on the manufacturing sector for raising prices at slightest pretext, the Finance Minister said such short-term temptation of the manufacturing sector to increase prices could cause damage to the economy.

He said there was an obligation for the industry to improve matters of corporate governance and ethics and also to keep the prices low.

"It is a key to orderly development of India," he said adding, the industry should keep the prices down by cutting costs, avoiding wasteful expenditure and upscaling factories.

The Minister asked the BCCI to set up two units for large tax payers and small tax payers to facilitate better tax compliance.

Chidambaram asked the industry to work with local Government for improving the infrastructure in Mumbai if the city had to achieve the status of financial hub.

He said Mumbai has the first place in the urban renewal mission of the Government and another year should not be wasted for availing assistance under it.