FM ready for talks on FDI issue

Govt willing to negotiate with Left parties, but decision will be binding

Finance Minister P Chidambaram said he was open to negotiations with the Left parties on lifting of caps on foreign direct investment(FDI) in insurance, telecom and civil aviation, but also added that they must respect the final decision taken by the government.

The minister made the comment in his reply to the discussion on the Budget 2004-05, in the Lok Sabha. Quoting Tamil poet Thiruvalluvar, he said "I will listen to my friends and take a decision in the best interests of the country". He said the mandate of the general election was to rearrange the priorities of the reform process.

The minister also asked corporates to pay up their tax arrears, as their earnings had risen on the back of a good growth rate recorded by the economy in last fiscal. "I aim to draw tax as bees draw honey from flowers, but there is a sting too," he said.

Chidambaram said it was nobody's case that FDI was not required in the country, but acknowledged that there were differences among the partners of the United Progressive Alliance government, on the sectors where they should be allowed into.

He added that the focus of his Budget was on boosting the investment, a signal that the government wanted to send out to the world.

Drawing comparisons with China, he said the difference between the two countries had whittled down to about six years development, but added "We cannot afford to lose the race".

The House later passed the Appropriation Bills, which authorise the government to spend from the Consolidated Fund of India, by voice vote after the Opposition staged a walk out.

The finance minister defended the expenditure and revenue projections made in the Budget, saying that there was no underestimation of spending requirements.

On the revenue estimates, he claimed he had taken credit for projected recovery of arrears, receipts from transactions tax and the 2 per cent cess on all taxes to arrive at his figures.

He, however, refused to divulge the sum that he hoped to realise from the undisputed tax arrears. "A tidy sum can be collected for which we shall use every weapon in our armoury", the minister added.

He said over a hundred countries had benefited from fiscal consolidation and India could not be an exception to the rule.

He underlined the need to stick to the roadmap outlined by the Fiscal Responsibility and Budget Management Act to bring down the revenue deficit.

The Planning Commission has already taken up the task of restructuring of the central schemes and a paper on subsidies would be tabled in Parliament soon.

The minister said an acceleration of the growth rate depended on how the agriculture sector fared. For this purpose, he said he had made a sharply higher allocation for the agriculture and expressed the hope that credit to the agriculture sector would also rise to Rs 1,50,000 crore from Rs 80,000 crore in 2003-04.

He also said the previous government had practiced poor Budget management by paying off a bill of over Rs 4,000 crore for defence purchases in April this year.

He said the sum was not provided for in the Interim Budget of 2004-05. He said he had provided for the same in the his Budget.

Chidambaram said the government was committed to complete the golden quadrilateral project for which he has provided Rs 5,058 crore in the Budget, against Rs 3,600 crore provided in 2003-04.

Plan of action

• Corporates asked to pay up their tax arrears, as their earnings had risen on the back of a good growth rate in last fiscal
• The golden quadrilateral project will get Rs 5,058 crore in the Budget, against Rs 3,600 crore provided in 2003-04