Coal supply to ease: FM

Expressing concern over the deficient supply of coal affecting growth in sectors like steel and power, Finance Minister P Chidambaram today said the government would take steps to address this problem over the next few weeks.

Making a sector-wise presentation on achievements during the first year of the UPA government, Chidambaram said the government was concerned over the decline in the growth of the coal sector to 3.9 per cent during 2004-05 from 5.8 per cent in the previous fiscal.

"This growth is unacceptable," he said adding that though coal production had increased by 5.9 per cent to 376.63 million tonnes, it was not enough.

The demand-supply gap in the coal sector had also impacted growth in the steel sector. The sector witnessed a 3.8 per cent growth in production in 2004-05, he said.

Referring to tax reforms measures, Chidambaram said he was hopeful that the tax-GDP ratio in case of direct tax would cross the milestone of 5 per cent this fiscal.

"Though the corporate sector is paying a huge amount of tax (both direct and indirect tax), it is not among the highest in the world. The corporate sector is paying the due share of its tax," he said.

The minister pointed out that even without a target for collection of arrears, the government had managed to mop up a tidy sum of Rs 9,725 crore during 2004-05.

"We have not set a target for this year but we will collect a tidier sum," he said when asked if a target had been set for the current fiscal. Stating that inflation was moderate, he said the government would do everything to keep it under control and the interest rate benign.

The minister said the Reserve Bank of India had projected that the economy would grow 7 per cent during the current fiscal. The growth in GDP would depend on sustaining investment, improving infrastructure, inflation and containing fiscal deficit and revenue deficit.

On the external trade front, he said there was a need to check the increase in trade deficit through a capital account surplus.

"If the trend in trade deficit seen in April continues through the year, India could end the fiscal with a trade deficit of $42-43 billion. While we may collect a part through invisibles but a major portion has to come through the capital account, which is why we need foreign investments," he said.

He also said the Investment Commission, headed by Ratan Tata, had recently submitted an interim report to the government and was focusing on effecting investments in three projects of steel (Posco), mining (Lafarge) and ports (Mitsubishi).

Chidambaram said the government would continue to talk to the Left on opening up the insurance sector for foreign direct investment.

Praising the Left for being a "helpful and alert critic", Chidambaram said he also expected the Opposition to extend constructive cooperation and support on issues like FDI in the interest of the country.