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Against the backdrop of concerns being raised on macroeconomic stability, Finance Minister P Chidambaram today presented a slightly brighter picture. He said the Centre’s fiscal deficit would be lower than the 5.2 per cent pegged for 2012-13, while the economic growth in 2013-14 would improve to over six per cent from the decade-low five per cent the previous year. The current account deficit (CAD) for full 2012-13 would surprise on lower side, he added.
At a press conference here, Chidambaram also made a case of reviewing foreign direct investment (FDI) caps in some sectors as the country looked for ways to finance the widening CAD. He said his recent visits to Tokyo and Dubai to woo foreign investors were quite successful.
His comments came even as the government was struggling to raise FDI cap in the insurance sector. He exuded confidence of breaking a ground with the Opposition on the insurance Bill, which sought to increase FDI cap to 49 per cent, from 26 per cent at present.
He said the tax collection target of over Rs 10.38 lakh crore for 2012-13 had been achieved and, considering there could be over six per cent economic growth in 2013-14, this year’s tax mop-up target would also be met.
The finance minister admitted there would be some shortfall on the direct-tax side but said that would be made up for by an indirect-tax mop-up higher than the Revised Estimate (RE) — resulting in a revenue growth of 16.7 per cent over the actual collections the previous year.
“As always, there will be some savings (on expenditure). If we reach the revenue target and if there are some savings, the fiscal deficit will be better than the projected 5.2 per cent… The revenue target of 2013-14 is achievable because we believe GDP will grow by six per cent or above that,” he said.
The RE for 2012-13 was Rs 5.65 lakh crore for direct-tax collections and Rs 4.69 lakh crore for indirect taxes. The total expenditure was pegged at Rs 14.30 lakh crore.
Chidambaram also said CAD, which soared to a record high of 6.7 per cent in the quarter ended December 2012, would come down to a more acceptable level in the full 2012-13 after the numbers for the fourth quarter are out. “If you are surprised by the largeness of the third-quarter number, perhaps you will be surprised by the smallness of the annual number,” he said, adding the government was taking steps to increase exports and contain inflation, but unless other economies with trade links with India improved, exports would not improve.
Asked about probe by the International Consortium of Investigative Journalists, the finance minister said the government had taken note of that and inquiries were put in motion in respect of the names exposed.
The expose is claimed to have unearthed details of 250,000 individuals and entities from more than 170 countries, including India, that evaded taxes by setting up companies in tax havens.
On the sting operations by Cobrapost, he said his officers had drawn some conclusions and if any violation was found with regard to tax laws, stern action would be taken.
Asked about the Vodafone taxation issue, the finance minister said the amendments to the I-T Act would be moved in Parliament, though not in the current session; that would be after a way to resolve the issue was found. The Cabinet would take a final decision on whether or not to go for conciliation.
Chidambaram said he hoped the Insurance Laws (Amendment) Bill could be passed by Parliament, as there was difference on only one clause. He also said there was a case for reviewing the FDI ceiling in various sectors, saying those were fixed long ago.
“We (should) look at each FDI cap. If the cap is serving a purpose, we should continue with it; if the cap is no longer serving the purpose, we should either relax the cap or remove it,” he said.
Chidambaram also said he would meet Petroleum Minister M Veerappa Moily soon to finalise schedule for rolling out the direct transfer of cash subsidy to LPG consumers. He added teething problems in the Direct Benefits Transfer were expected, but the system would get better going forward. He said the scheme would be rolled out in all districts (or nearly all districts) of the country by the end of the current financial year.
The finance minister agreed the subsidy bill for this year would go up by Rs 2,500-2,600 crore for a year due to sugar decontrol and the Centre would bear the burden for two years, but eventually states would have to meet their own arrangements.
Chidambaram said the fourth meeting of the Cabinet Committee on Investments (CCI) in April would consider 31 oil & gas projects for clearance. He said his visit to Dubai and Japan to project India as an investment destination was quite successful. He also ruled out elections before May 2014.
