Indicating unleashing of more measures to boost economy, finance minister P Chidambaram on Monday ruled out rolling back decisions on diesel, LPG and FDI in retail and expressed confidence that the government faces no threat from allies either inside or outside.
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Close on the heels of the government taking hard decisions, Chidambaram said between now and October 30 department of revenue, disinvestment and SEBI would decide on steps to revitalise economy, hinting that they will be in the areas which he had talked about in his August 6 statement after he took over.
During the hour-long interaction, he touched on various issues including Vodafone tax issue, GST, direct taxes code and fiscal consolidation.
"Opposition will demand a rollback. As far as I know we are not rolling back any of these decisions," he told select
journalists in New Delhi.
He was asked about the demand 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.
He said "a political government knows what is doable and what is not doable. Advisers can advise, but we have done what is doable".
Asked about stiff opposition to the decisions from UPA constituents like Trinamool and outside allies like Samajwadi Party and BSP and whether government has risked its stability, he said, "I do not think government faces any threat. Government is stable. Our allies in the government and outside will understand and continue their support to the government. We will be able to convince our allies."
"I think clearly, political government knows what is doable and what is not doable. We have done what is doable," Chidambaram said.
"There will be a debate and exchange of views. There will be hot words, ultimately we will be able to convince our allies that what we have done is what is necessary and what is imperative to keep the economy going (and to protect it from) internal and external threats to the economy," Finance Minister said.
He referred to the West Bengal chief minister Mamata Banerjee's statement that she understood the gravity of the crisis and added that nobody has questioned the soundness of the decisions.
By capping supply of subsidised LPG cylinder to six per family in a year, he said the government has altered the behaviour of others.
"People who got their 100 cylinders at subsidised rates may not go beyond 30. Behaviour would alter. And once we link LPG to Aadhar, a large number of duplication will be eliminated. These are invisible savings which are likely to come in the long run," 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 to get rating by credit rating agencies. We are making policies, what are doable and what are implementable. We make policies which have broad acceptance. We see that this is ultimately what government can do.
"What government does can prompt them (rating agencies) to rate government bonds," he said.
Welcoming the RBI's decision to cut Cash Reserve Ratio by 0.25%, Chidambaram said the mid-quarter review of monetary policy has thrown up a number of interesting questions.
Asked what more decisions can be expected from the North Block (finance ministry) and the government, he said, "well, a number of issues which I have on my notepad, I have discussed with SEBI, with department of revenue and department of disinvestment. Some ideas were thrown up at the meeting of the (full) Planning Commission (on Saturday).
"So I am hoping that we will have a Cabinet meeting and of cabinet committee on economic affairs this Thursday and the next Thursday. Some of the things have been done in last few days. Then you will know which other parts of the August 6 statements can be done in the next few days," he said.
On apprehensions about fiscal deficit target not being achieved, the finance minister conceded that there could be some slippage.
"Well we will be lucky if we can achieve 5.1% (of GDP). There will be some slippage but how much slippage will be there will depend upon some other decisions to be taken.
"We cannot afford a large slippage. Therefore we cannot allow large slippage. We are certainly looking at maximising our resources of revenue and also curtail some expenditures," he said.
Chidambaram said the Kelkar Committee, which went into the issue, has given some suggestions and government was working on it.
On GDP growth for the current year, Chidambaram said it was too early to estimate. Estimates made last year all turned out to be wrong. "We have two estimates with us now. One is the RBI's 6.5% and Prime Minister's Economic Advisory Council's 6.7%. That is about the range everybody says".
On disinvestment he said there are still six months to go before the year comes to an end. "I hope the market is favourable. The disinvestment of all four companies before the year is over. What method we will adopt, I cannot say. That is a question left to the empowered committee."
"They are all on the table. All the four companies have to go in the next six months to get Rs. 30,000 crore. We have set a target of Rs. 30,000 crore. My objective is to get Rs. 30,000 crore. At the moment, why should I assume I will not achieve that," he said.
On Direct Taxes Code, the Finance Minister said, "it has undergone huge metamorphosis... I will have to spend a few days looking at the each of the crucial sections and chapters."