 "P Chidambaram")
At the India Summit organised by The Economist here, Chidambaram said he wasn’t in the race for the prime minister’s post and given a choice, he would like to either work for the Congress party or travel. He added the United Progressive Alliance (UPA) government would complete its second term.
“We have listed the things we intend to do. We want the land Bill passed; we want the insurance Bill passed with FDI (foreign direct investment) at 49 per cent. I sincerely seek the cooperation of the principal opposition party and other political parties,” he said.
Chidambaram also sought the cooperation of various parties to push the GST Bill in Parliament. He said the chances the legislation would be passed during the UPA’s remaining term stood at 70 per cent.
“GST is possible, but only if the central government and all the state governments, which are now ruled by eight-nine different political parties, are together,” the finance minister said. After the constitution amendment Bill is cleared, the central government would table a model GST Bill in Parliament, while states would table their respective Bills in their assemblies.
Chidambaram said as finance minister during the UPA government’s first term, he was able to build a consensus on value-added tax. “I am trying to forge a similar consensus on GST...Now, we have reached a stage where the empowered council (of state finance ministers) has authorised us to draft a constitution amendment Bill, (and) a normal Bill for introducing GST,” he said.
The finance minister also listed other targeted reforms. “We want a regulator for the coal sector and the road sector in place; we want a rail tariff authority in place,” he said.
“We will continue to take small, significant steps. We will also take forward some big ideas. India’s economy will continue to reform,” he said.
Amid the government staring at a high current account deficit (CAD), the finance minister emphasised the importance of foreign investors. “CAD is indeed high...(it) is more worrying than the fiscal deficit. In 2012-13, CAD is expected to be $90-94 billion. The satisfying aspect of this is we have financed it completely, without drawing down our reserves. There have been copious inflows,” he said.
“We need to open our economy more. We have to give more space for FDI,” he said, adding FDI caps could be removed if it was found these were no longer useful.
He hoped CAD would be about five per cent in 2012-13. “Going forward, we will bring it down...The way to do that is to boost exports...If we can conserve oil consumption 10 per cent, we can save $17 billion. And, if we can control our passion for gold, we can save many more billion dollars. It’s a difficult act, but I am confident with the steps we are taking to encourage inward inflows, we will be able to bring it down,” he said.
He assured investors that this financial year, the fiscal deficit would be below 4.8 per cent.
“As we remove investment bottlenecks, you will find growth picking up. In 2013-14, growth would be 6.1-6.7 per cent,” he said. He expressed confidence it would rise to seven per cent in 2015-16, without fuelling inflationary expectations.
He added the economy had the potential to grow eight per cent a year, something Prime Minister’s Economic Advisory Council Chairman, C Rangarajan, had said yesterday.
Chidambaram also said there was a need to take immediate action to increase penetration and coverage of the non life insurance in the country at a function by Dena Bank.
