NEW DELHI, Sept 17:
Promising further measures to boost economy, Finance Minister P Chidambaram today ruled out going back on reform decisons on diesel, LPG and FDI, asserting that Government faces no threat to its stability from differing allies.
Close on the heels of the Government taking hard decisions, he said, “the next few weeks” will see more action to boost manufacturing and investor confidence through actions from SEBI and Departments of Revenue and Disinvestment.
During an hour-long interaction with journalists, he also touched on various issues including Vodafone tax issue, GST, Direct Taxes Code and fiscal consolidation.
“Demand is one thing. The opposition who opposes the decision will demand a rollback. But has anyone in the Government given any such impression. As far as I know we are not rolling back any one of those decisions,” he said.
He was asked about the demands from allies like TMC and the Opposition for withdrawing the hike in the price of Rs 5.63 per litre in diesel, limiting supply of subsidised LPG to six cylinders per household in a year and allowing foreign direct investment in retail and aviation.
“As far as diesel, kerosene and LPG are concerned, we have done what is doable. I think, clearly the political Government knows what is doable and what is not doable. We have done what is doable,” he said.
Asked if the Government faces any threat to its stability from allies, he said, “I do not think that the Government is facing any threat. The Government is stable. There are allies both in the Government and outside. I am confident that they will continue to support us.”
He said there will be debate, discussions and exchange of views, sometimes even hot words. “But I think ultimately we will be able to convince our allies that what we have done is not only necessary but also imperative in order to keep the economy going.”
Chidambaram said there were internal and external threats to the economy and once they are pointed to allies they will understand. “I can quote what the Chief Minister of West Bengal (Mamata Banerjee) said ‘I understand the gravity of the economic crisis’,” he said.
“Advisers can advise you everything. But the political Government knows what is doable. We have done what is doable,” Chidambaram said.
By capping supply of subsidised LPG cylinders, the Government has altered the behaviour of other people who got 100 cylinders at subsidised nature and now may not go beyond 30, he said.
Chidambaram dismissed the perception that Government plunged into action because of a “looming threat” of downgrading by rating agencies.
He said Government does not frame policy for rating agencies. “We don’t make policies in order to get better credit rating. We are making policies for the people. We make policies that are doable, implementable.
“We make policies that will have broad acceptance among the people after reflection, consideration and debate. We think that ultimately what Government can do, what Government does, that should prompt credit rating agencies to rate Government bond and other securities,” he said.
He did not think rating downgrade was looming large. “Rating downgrade threat was by one of the two agencies, not all. I don’t think anyone on behalf of the credit rating agency has told us yet that none of the decisions are intrinsically unsound. Nobody has questioned the soundness of the decisions. None of them have said these are not doable.”
Asked what more actions could be expected from the Government, Chidambaram said, “well a number of issues I have on my note pad and have addressed with SEBI, with department of revenue and with department of disinvestment.
“Some ideas were thrown up at the meeting of the Planning Commission on Saturday. So I am hoping that we will have a meetings of Cabinet and Cabinet Committee on Economic Affairs this Thursday and next Thursday,” he said.
The Minister said most of the things to be done have been indicated in an August 6 statement after he took charge of the Finance Ministry.
“Some of the things have been done in the last three days. Then you will know which other parts of the August 6 statement can be done in the next few weeks,” he said.
On what steps can be expected in the manufacturing sector, he said, “there will be a JNNURM-II in this plan period. Investment alone will give a fillip to manufacturing.”
Chidambaram said investment in greenfield projects was one thing and in brownfield projects was another.
“Investment debottlenecking is also investment. If there are supply constraints, investment have to be made in debottlenecking those constraints. That will improve supply.
“I do not think there will be fall in demand in India. There is so much pent up demand in India. We will have to address supply side constraints, give the confidence to manufacturers. Once the confidence comes back to market, we will find that manufacturing and Index of Industrial Production (IIP) will pick up,” he said.
The Minister said when SEBI meets next towards this month end, the Government member in the Board will propose some agenda items. “There will be action on some agenda items brought to the table.”
Asked about the suggestion he made in the Planning Commission meeting of setting up of a National Investment Board headed by the Prime Minister to give single window clearance to mega projects, he said he made this point because projects suffered at the stage of final decisions due to lack of one final decision making authority.
“Unless we create a system by which final decision emerges in a reasonable period of time, I am afraid these Rs 1000 crore-plus projects will not take off,” he said.
But pending that, he said the Government was fast tracking some of the 89 such projects. “They will submit their report by the end of the month and I will submit the report to the Prime Minister. I think some of these projects will move forward,” he said.
He said all of them will be fast-tracked but some of them will get automatically fast-tracked.
Finance Minister made it clear that Government will take measures to improve fiscal consolidation and reduce fiscal deficit. However, he admitted there could be slippage in achieving the fiscal deficit target of 5.1 per cent of the GDP in the current fiscal.
“We will be lucky if we can achieve 5.1 per cent. There will be some marginal slippage but how much slippage will be there will depend upon some other decisions to be taken,” he said.
Chidambaram said spectrum, which would get a ‘good price’, has already been factored in. “We are certainly looking at maximising our resources of revenue and also curtailing some expenditures.”
On growth for the current fiscal, he said while it was too early to estimate, there are two estimates — 6.5 per cent of RBI and 6.7 per cent of Prime Minister’s Economic Advisory Council-about which everybody is saying.
On disinvestment, he said four companies including Oil India, Hindustan Copper, Nalco and MMTC, would be on the table in the next six months and Government hopes to reach the target of Rs 30,000 crore for the year.
On the Direct Taxes Code initiated by him during his tenure as Finance Minister in UPA-1, he said it has undergone a huge metamorphosis and he would take a few more days looking at each of the crucial sections and chapters.
He however added that the country must have a direct taxes code, which would serve next 20-30 years. “The IT Act, which is 60 years old, is now a lawyers’ paradise and if you are going to create another lawyers’ paradise, then it is as well that we live with the present one because at least we are familiar with the sections.” (PTI)
Trending Now
E-Paper
Follow our WhatsApp channel