A number of non-legislative decisions covering Customs, Excise, Service Tax, insurance and banking to promote growth will be announced in Parliament before the passage of the Finance Bill.
Disclosing this here today, Finance Minister P. Chidambaram said that the Budget presented by him on February 28 focussed on the legislative areas and the broad agenda. The government was now working on non-legislative decisions.
These decisions would involve customs, excise, service tax, insurance and banking, he said, adding “more announcements will be made and more decisions will be taken” during the reply to the debate in Parliament on the Finance Bill.
During a comprehensive post-Budget interview, Chidambaram told PTI that he was satisfied with what he had done in the budget with a view to restarting the growth engine.
“My party appears to be happy. The opposition, of course, would have to be critical. That is the role of the opposition to expose, oppose and depose as it is said.
“I am not not perturbed by the criticism. The media, as usual, magnifies certain things and ignores certain other things. So that is part education, part entertainment. It has been a mixed bag of emotions to see the reactions,” he said.
Laughing off a question about the absence of any ‘big bang’ announcements in the Budget, the Finance Minister said, “big bang interests only the media. What the people want is small, critical steps that will restart the growth engine.”
In his view, “the media likes frenzy, the media likes theatre” but people like orderly growth and orderly lives.
Ruling out any “populist” measures between now and the Lok Sabha polls due before May, 2014, Chidambaram pointed out that a government can present only five budgets and the UPA had presented its fifth one. There will be a vote on account next February and then there will be elections.
During the hour-long interview, Chidambaram answered questions on wide-ranging subjects including the tax on ‘super rich’, steps to check tax evasion and bring out black money, and ruled out any amnesty scheme for evaders.
Answering why the Budget was not ‘populist’ as was expected because of next year's elections, he said the Congress party clearly understands that economic space is restricted today and that the foremost challenge before the country is to re-start the growth engine.
To a question on what would be the objective of the new set of decisions that will be taken, Chidambaram said, “I can’t say it now. Parliament is in session. Objective is to promote growth.”
Asked if it was a conscious decision not to make a splash, Chidambaram said, “that was not my idea ever.”
On whether his hands were tied in making the Budget because the economy is challenged, the Minister replied that “hands were not tied. The economic space is restricted. An economy growing at 5 per cent gives you only so much space, while an economy growing at 9 per cent gives you more space.”
He said the tax concession for investment of Rs 100 crore in plant and machinery was a step to promote manufacturing.
“Manufacturing is the only way economic growth can be accelerated. Manufactured exports, exports of manufactured goods is the only way to enable foreign exchange and pay for our imports. Therefore, in order to revive manufacturing, which is not doing well we have announced the investment allowance,” he said.
Asked about the basis for his hope on improved growth in the coming fiscal and whether government’s advisors have failed in projections, Chidambaram shot back, “I don’t know how competent you and I are to comment on the advices.
“I have a Chief Economic Advisor who is a renowned economist. The Prime Minister has an Economic Advisory Council headed by renowned economist and former RBI Governor.
“Both of them in their independent assessment told us that growth will be over 6 per cent and closer to 6.4 per cent or so. So why should I doubt their advice and why should I reject their advice.”
Insurance, Pension Bills
He also expressed confidence that government would be able to get the insurance and pension bills passed in the current session of Parliament with cooperation from Opposition including the BJP.
“Yes. We are making progress. Just as we were able to pass the Banking Bill and the Sarfaesi Bill in the last session. I think the consultations we are having with the BJP, the principal opposition party and then we will have it with other parties. I am reasonable that we would be able to pass the insurance Bill and the pension Bill in the current session.”
Following are the excerpts from the interview:
Message to investors: The message we want to send investors that we believe in stable tax rates. We believe in moderate tax rate. We believe in non adversarial tax administration, a fair and just dispute resolution mechanism and independent judiciary. Five principles which I stated on August 6, remains our principle.
DTC and GST: DTC will be introduced before last date of this session of Parliament. GST will depend on state finance ministers. I have done my part, the ball is in their court now. They have come back with draft constitution amendment and draft GST model law. I think they are working on it. Mr Suhsil Modi has said he has been working on it.
Ratings: I don’t rate my budget. I don’t rate any one else Budget also. I am not a rating agency. We make a Budget for people. Since rating agencies had apprehensions about what we will do and what we will not do, I was obliged to allay those apprehensions by saying we have a fiscal consolidation path, we will adhere to fiscal consolidation path and wait until February 28, I will demonstrate. I have demonstrated. The matter is over.
Fiscal deficit: Budget is delivered on the last working day of February. Petrol price adjustment was made by oil marketing companies. It is only the media which makes the connection.
The average man on the road does not make any connection.
Compressing Plan Expenditure: You had to compress expenditure. Non-Plan expenditure is completely inelastic, its committed. Defence, para military, salaries, interest payments, these are all committed expenditure. These are non-Plan. Therefore, you cannot compress non-Plan expenditure.
Gujarat model of growth : I don’t think there is anything like Gujarat model. It is another invention. There is no such thing as Gujarat model. I think, every State implements certain economic policies consistent with the requirement with that state. Sometimes you get good result, sometimes you get poor result. I don’t think we should describe it as Gujarat model or X model or Y model.
It has been pointed out that there are huge deficiencies in malnutrition, gender welfare and in the status of SCs and STs. Perhaps the state will address them. I am sure Gujarat like any other state has pluses and minuses. If there are minuses then I am sure Gujarat will address those minuses.
Anyone can make tall claims, but it is the outcome that matters. But I am not denying that Gujarat has developed in many areas. But if there are deficiencies it must be addressed also.
Chidambaram as PM : It amuses me. They (a weekly magazine that has put him as Prime Minister on the cover) might end up selling less copies.