The Finance Minister told industry leaders that "many of things which could have been done, rather should have been done, could not be done just at the time of the Budget".
Finance Minister Pranab Mukherjee on Sunday asserted that tackling the problem of rising fuel subsidies and the need to hike oil prices would have to be taken outside the budget during the new fiscal year in consultation with all political parties and stakeholders.
In a candid interaction with India Inc. in his customary post-budget meeting with captains of industry and apex chambers here, Mr. Mukherjee rebutted criticism of the budget not being bold on reforms and the government having lost an opportunity, saying he had to be “extra careful” owing to political compulsions of Parliament and coalition politics.
“Knowing the mood of the persons who matter here [in Parliament], I had to be extra careful and I had to make my colleagues extra careful. Therefore, many of the things which could have been done, rather should have been done, could not be done just at the time of the budget.”
Mr. Mukherjee told corporate honchos that he had to be alert to the prevailing “ground realities” in view of the quick policy shifts among the political parties where a “decision taken in one House is reversed or changed within 24 hours, when the same proposal approved by one House comes to the other House.”
With the Trinamool Congress seen as a difficult partner in the UPA coalition government, Mr. Mukherjee was evidently hinting towards the evolving numbers game in the Lok Sabha, apart from the Upper House (Rajya Sabha) where it does not enjoy a clear majority.
Intending to cap the subsidies at two per cent of the Gross Domestic Product (GDP) and proposing to bring it down to 1.75 per cent over a three-year period, the budget has pegged the total outgo at Rs. 1.79 lakh crore for 2012-13, which is much lower than the spending of Rs. 2.08 lakh crore during the current fiscal. Clearly, the allocation would not suffice and steps will have to be taken to tackle the problem.
“However, the budget is not the only avenue to sort this out. I know there are certain sectors, where we shall have to address the issues and budgetary exercise is not the only exercise. There are other administrative and outside budget decisions to be taken ... bringing the political parties, State governments on board and that cannot be [done] only through budgetary exercise,” Mr. Mukherjee said.
Explaining that a collective decision would have to be taken on the issue of oil prices sooner than later, he said: “I am putting this question bluntly in respect of fuel subsidies...Can a country afford to import 100-120 million tonnes of crude [at high] prices?...That very question is looming large...We shall have to collectively address this issue…There are various suggestions, we are working on it...I would like to involve all the stakeholders, bring them on board to take the corrective decision.”
As for the grievance over high interest rates leading to low growth and slowdown in investment, Mr. Mukherjee told industry leaders that the government was expecting a lowering of rates in the coming months by the Reserve Bank. “The fact that core inflation has moderated in the past three months and that in coming months we are looking at reversal in the policy rates should help in improving sentiments,” he said.