FM on Budget: Historic decision for farmers

It was an aggressive Finance Minister P Chidambaram going all the way to promote the mother of all loan waivers -- the Rs. 60,000 crore farm loan waiver. Defying charges of his political opponents and even Left allies, Chidambaram chose a counter-offensive: "Let every politician and political party take a stand on our decision to write off farmers' loans. They should stand up and say if they are for the farmers or against them. If they have the courage to oppose, they should stand up and be counted."

Even as his party leaders are hailing the 2008-09 budget as their main poll plank for the next elections, Finance Minister never wanted to subscribe to this point of view that he had just presented an election budget. "In India, we have elections every year. So, on this count, every budget can be termed as an election budget," said Chidambaram at the press conference here today.

On waiver of farm loans, he said: "It is a momentous, historic decision. It strengthens the system rather than weakening it. The amount of loan waiver is Rs 60,000 crore. The entire amount has been lying with banks as NPAs so to that extent banks are weakend. Writing off these loans by providing this money will help the banks issue fresh loans and stimulate the economy. This does not include loan from private money lenders as nobody has told me yet how we can address this issue. Except debt waivers, every other expenditure has been provided for in the budget. In the case of debt relief, in a period of three years, we will provide the liquidity to the banks to the extend of the waivers they have given to the farmers."

Chidambaram also wanted to emphasise that there is no dearth of money for social sectors and there are 'incentives' for doing a good job. "We have stuck to fiscal prudence. We have provided ample funds for our flagship programmes. We have reaffirmed our commitment to the social sector and Bharat Nirman. In addition to what I have given, there is Rs 10,000 crore in my hand. I have told the states and central ministries that if you are able to spend your budget allocations, ensure the quantity and quality, then you can dip into this kitty and ask for more money," he said.

According to him, the growth story has not been affected. The GDP growth during the first three quarters of this year is 8.9%, and he predicts that by end of the year the government will maintain a batting average of 8.8% growth. However, he added that although the growth story is intact, it's not yet inclusive. "All people are yet to participate in this growth, hence allocations to those sectors that have not been properly represented are ample. I will not allow room for complaint. I will provide them more money if required," he said.

He also mentioned that the states have benefitted most during the UPA regime. "States never had it so good. Their share of taxes have increased. This year the states had recieved Rs 1.52 lakh crore as taxes. Next year, they will get Rs 27,000 crore extra as their share of taxes. The states will have the capacity to take on more responsibilities and they should take more responsibilities," he said.

"We are among the best investment destinations of the world today. The FDI, FII flow is very large. Tourist arrivals have increased. Service sectors are growing at a rapid rate. We should capitalise on our opportunities," said Chidambaram.

He stated that the economy is on an investment boom and will not decline. Chidambaram said that fiscal steps have been taken to stimulate sectors where consumption is on the decline. "The downslide is primarily caused by crude oil prices, commodity and food prices. The government and RBI will watch the situation closely. The most important challenge for the coming year is to manage the supply side of food effectively. I am sure agriculture minister Sharad Pawar will take care of that," he said.

He also refuted charges that nothing has been done for the corporate sector. "I asked myself what does corporate sector need? They need policy changes, supportive banking system, good capital market, freedom to produce and sell products - we have done it all. 2008-09 will also remain as a year of high profit. We have not imposed any new burden on them and made sure demand increases. Excise cut and income tax reductions all means an increase in demand."

"We have left, at the minimum level, Rs 4,000 in every tax payer's pocket. Tax savings at the highest end of second slab  is Rs 24,000 and third slab it is Rs 44,000. Whether the money is spent or saved, it is good for the system. This budget is all about creating wealth and distributing wealth," he said.