Firm in his resolve to carry on with the reforms programme initiated last September, Finance Minister P. Chidambaram on Wednesday asserted that the government would continue to take “small but significant steps” along with more executive actions in the next two to four months to ensure that the economy touched its “potential” growth rate of eight per cent.
Ruling out early elections, he said UPA-II was committed to taking the economic reform process forward till the last day of its five-year term. “We will continue to take small significant steps. We will also take forward some big ideas. India's economy will continue to reform... In his keynote address and interaction at ‘India Summit 2013’ organised by The Economist group here, the Minister sought the cooperation of the main Opposition and others to ensure passage of a clutch of major laws, especially as economic issues, he argued, should be dealt with in a bipartisan manner.
In this regard, Mr. Chidambaram listed the legislation on land acquisition, insurance and the Goods and Services Tax (GST) that required parliamentary approval and which could go through only when UPA-II and the main Opposition and others are were on the same page.
“We want the Land Bill passed; Insurance Bill passed with FDI at 49 per cent. I sincerely seek cooperation of principal opposition and other political parties…We want the regulator for coal sector, road sector in place; we want rail tariff authority in place to fix tariff in railway sector,” he said.
“If the principal Opposition is willing to work with us, much of what I have outlined can be done. If the principal Opposition party would be sitting where I am sitting today, they would do the same thing…Given the plurality of India’s politics and the need for carrying the regional political parties together, it is important that two principal parties work together and keep a number of issues bipartisan, especially economic issues.”
Referring to the tough reform measures such as opening of multibrand retail, deregulation of petroleum prices and partial decontrol of the sugar sector which are now in place, as also the various issues that require a look-in, Mr, Chidambaram urged both foreign and domestic investors to repose faith in the Indian economy which, he said, was expected to grow by 6.1-6.7 per cent this fiscal from the decade’s low of five per cent in 2012-13.
In particular, a fresh look at the caps on foreign direct investment (FDI) was necessary as the ceilings were fixed long ago. “We need to open our economy more. We have to give more space for FDI.” Mr. Chidambaram indicated that the FDI caps could be removed if they were found no longer useful. “Two committees are already are looking into various aspects of the foreign investment and FDI caps.”
Of the twin deficits on the fiscal and current accounts, Mr. Chidambaram said it was the current account deficit (CAD) that was more worrisome and while boosting exports would be a long-term solution to bridge the gap, the stress on more FDI flows was deemed essential. “CAD is indeed high ... [it] is more worrying than fiscal deficit. In 2012-13, CAD is expected to be $90-94 billion. The satisfying aspect of this is that we have financed it completely without drawing down our reserves. There have been copious inflows.”
Mr. Chidambaram hoped that the CAD during 2012-13 would be close to five per cent and “going forward, we will bring it down...The way to do that is to boost exports...If we can conserve oil consumption by 10 per cent, we can save $17 billion. And if we can control our passion for gold, we can save many more billion dollars…”