FM's prescription for economy

Says stalled projects have been identified and will be cleared in the next few weeks

Finance Minister P Chidambaram on Tuesday said key infrastructure projects facing delays have been identified and will be cleared in the next few weeks, in a vow to get the manufacturing sector and the economy out of downturn. However, he said there were no quick-fixes to economic problems and the government was working to stabilise the economy which might take time. "Manufacturing is not picking up because demand is sluggish. Demand for cars, two-wheelers, white goods is sluggish. For consumer non-durables, the growth is over 12 per cent. It is the consumer durable which is sluggish and in negative growth," he said.

The minister said there is manufacturing capacity but sentiments need to change for buying durable goods. "That is one part of manufacturing. The other part is the core sectors like steel, iron ore, coal, power, minerals. Manufacturing must grow there and output in terms of coal, iron ore, steel, aluminium must increase. That will happen as the upturn takes place,"

The minister said coal production has improved while iron ore, which is caught in a number of litigations, will hopefully clear with the Supreme Court hearing the case. "We have now identified stalled projects and are trying to remove these bottlenecks so that things begin to move. I think work is at pace. A special cell has been constituted. The Cabinet Secretariat is looking at the projects that can be cleared in next few weeks. If they require a decision by the Cabinet Committee on Investment (CCI), we will bring it. Once the core sector production goes up, you will find the industrial and manufacturing sector also move up,"

Chidambaram said the economy was taking time to return to high growth trajectory because of problems in western economies. "The upturn that was expected has not taken place. At the same time, there is no spiralling down either. I think our economy is getting stabilised. There are some weaknesses. There are signs that we are moving towards a more stable period. It will take time," he said. "They will yield result in the long term, but as that happens, the medium and short term problems will be addressed. There will be many more decisions in July."

He said the Cabinet will decide on raising FDI caps in sectors in the second or third week of this month. "Papers will have to come from the Ministry of Railway, from the Ministry of Coal, Ministry of Mines, from the Planning Commission, from the Ministry of Petroleum and the Ministry of Fertilisers. Hopefully they will come in July and we will take decisions on them," Chidambaram said.

The government, he said, has been successful in containing fiscal deficit, increasing revenue collection and promoting savings. Chidambaram said the fiscal deficit target of 4.8 per cent of GDP would be met in the current financial year. In 2012-13, the government had contained the fiscal deficit at 4.9 per cent, much lower than the budgeted 5.2 per cent. "It might appear to be a small step from 4.9 to 4.8 per cent, but to achieve 4.8 per cent we have to be watchful and I am confident this year too we will achieve the fiscal deficit target of 4.8 per cent," he said.

On steps being taken to boost exports, he said Commerce Minister Anand Sharma has held one round of meeting with industries last week and would be meeting this week to explore how outward shipments might be increased. "I think they are now looking at it sectorally to look at the sectors in which there can be quick rise in exports. I think they are looking at engineering, gems and jewellery before talking tothe media about it," he said.

On whether decisions like hiking price of natural gas could result in unpopular effects like rise in electricity tariff and prices, Chidambaram said, "We are not taking these decisions to make ourselves more popular or less popular. These are decisions which have to be taken in order to stabilise economy. We are in a very difficult global situation where every country has to make the necessary adjustments to deal with the impact of what is happening in the rest of the world."

He conceded that if some price corrections are made on some commodities or inputs, it will have an impact on the prices of downstream products and services. He cited the example of the hike in MSP of paddy and said it would certainly have an impact on the price of rice. "If for some reasons, some sections cannot afford that price, then the government has to subsidise that. So I don't think you can look at decisions as decisions that have no impact on other aspects of economy. Every decision will an impact," he said.

Asked if the government will subsidise gas to power and fertiliser units on account of the decision to hike natural gas price, Chidambaram said currently only price for gas producers has been fixed and there was still time to fix the input price for user industries.