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Chidambaram holds on to FDI limits

By Alok Mukherjee

NEW DELHI, JULY 21. The Union Finance Minister, P. Chidambaram, today avoided a direct response to those critical of the proposal to raise the foreign direct investment (FDI) limit in telecom, insurance and civil aviation and instead said that the message should go out to the world that India was open to investment.

"The quarrel is not with FDI, but in which sectors it should go and the quantum," the Minister said in the Lok Sabha while replying to the general debate on the 2004-05 budget. "Some people say I am under pressure from my Left friends. Let me say I am very pleased working with the Left friends," Mr. Chidambaram said and went on the quote the Tamil poet Tirvalluvar — "Talk sweetly to your friends, listen carefully to your friends, but then decide like a good king." "I intend to do just that," the Minister said.

`All investment welcome'

Pointing out that foreign direct investment filled the gap between domestic savings and domestic investment, he said the proposed Investment Commission would solicit domestic, foreign, public and private investment. "All investment must be welcome in the country. The message should go out to the world that India is ready for investment, under whatever is the policy." Taking his case further, Mr. Chidambaram said China had taken a lead over India in terms of attracting FDI by about 10 years and recently this lead had been narrowed to 6-7 years. "If we miss the boat now, the gap will only increase," he said.

On the Board for Reconstruction of Public Sector Enterprises, the Minister said the public sector managers would have to be accountable for the money the people had given them. "They must create wealth, not waste wealth," he said. Referring to the chronically sick PSIs, he said there were guidelines in the Common Minimum Programme on how to deal with such cases.

Mr. Chidambaram used the rest of his reply to defend his budget proposals saying the emphasis was on agriculture, industry and the social sectors. The budget, he said, had facilitated greater investment in agriculture, industry and services because investment was the key to growth, to employment, to higher income and also the key to maximising the welfare of the people. The budget had also focussed on education, on health, on the mid-day meal scheme, on universal health insurance for those below the poverty line, on education loans and on strengthening the Industrial Training Institutes.

Commenting on the poor delivery system in the country, he said it would not be possible to throw good money behind bad money as the Government did not want to create a bottomless pit where scarce resources would be wasted.

Hence, there were specific allocations for the accelerated irrigation benefit scheme, on restoring water bodies, and on the Rural Infrastructure Development Fund while new initiatives had been introduced for agro-business through tax reliefs. There was also a National Horticulture Mission for the whole country instead of only four States as in the past. Also, fiscal incentives had been given to tractors, hand tools, and dairy machinery, all intended to facilitate greater investment.

PDS to be strengthened

On unemployment, the Minister said jobs would come through investments and growth in agriculture, industry and the services and which would take time. Till then, to take care of the immediate need to address hunger, the food-for-work programme had been launched with increased allocation and more foodgrains would be provided in case of a drought this year. The Minister reiterated that the public distribution system (PDS) would be strengthened and the food stamps initiative was to experiment with a new system.

Mr. Chidambaram defended his expenditure and revenue estimates, saying they were not underestimated or overestimated in respective cases. He quoted figures to suggest higher allocations had been made for rural development and to address the problem of drinking water.

Responding to critics who said meagre allocations had been made for programmes included in the CMP, he said, "all of us have to be patient. The CMP is a road map for five years and this Government will last five years to implement them [programmes]."

The House later passed a vote-on-account enabling the Government to carry out essential expenditure for the next few months till the demands for grants of various Ministries was passed by Parliament.

The earlier vote-on-account sought by the Vajpayee Government covered expenditure in the new financial year till July 31, 2004.

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