Replying to a debate in Parliament about the state of the Indian economy, Finance Minister P. Chidambaram today listed out 10 points which he said the government should take in order to get the economy back on track. While he asked the government to speed up investment, encourage manufacturing and boost exports, he also lamented that Parliament had to run to the Supreme Court or the Supreme Court-appointed benches.
Controlling fiscal deficit: The first task at hand is to control fiscal deficit - at 4.8 per cent, the Finance Minister said. He said that while the fiscal deficit was not in control when he took over and was threatening to go beyond 6 per cent even though the Budget said 5.1 per cent, he has managed to keep it in control. He added that the best way to control the deficit was to cut down on expenditure.
Controlling current account deficit: Financing the current account deficit has become a major challenge, Mr. Chidambaram said. He said the government will contain the deficit it at $70 billion or below, and will safely finance it.
Adding to the reserves: While the reserves are adequate, it is important to add to it, he said. We must use FDIs, NRI investments, banking capital and ECBs, the minister added.
Reviving the investment cycle: It is important to unblock the stalled projects, and ensure quicker disbursal of funds where projects have been approved. The Cabinet Committee on Investment has so far cleared 173 projects with an investment of Rs 1,93,806 crore.
Quicken the capex programme of PSUs: Public sector enterprises are sitting on large quantities of cash and it is important to quicken the capital expenditure programme, said Mr. Chidambaram. Even the performance rating of the top management will be linked to it, he added.
Capitalise the public sector banks: While the public sector banks are well capitalized and are well above the Basel III norms, it is important to pump in more capital in them to boost investor confidence, Mr. Chidambaram said. He said Rs 14,000 crore will be invested in the PSU banks, adding that every rupee that is gained out of the disinvestment in Coal India Ltd will be used to capitalize public sector banks.
Reap the benefit of the good monsoon: Nothing must be done that will come in the way of maximising agricultural production, and therefore, the gas allocation to fertilizer sector will be maintained and not a single unit of gas will be reduced, the minister said. This will ensure that the maximum amount of fertilizer is provided to farmers all through the year. Banks, too, have been instructed to provide as much loan as the farmers require, he added.
Encourage manufacturing: Mr. Chidambaram said manufacturing has been allowed to languish in the country, and given India's size it was important that the sector is revived. He said the imposition of customs duty on high-end flat screen TVs was not capital control, but a way of encouraging manufacturing in the country. Manufacturing must be encouraged in power, steel, metal, automobiles, electronic hardware and textiles, he said, adding that India was currently importing items that could easily be manufactured in the country.
Encourage exports: Unless exports are increased, the current account deficit cannot be reduced. Exports have risen 11.7 per cent in July 2013 over the previous year. Trade deficit has narrowed to $12.3 billion in each of these months. Services exports have increased every month since April 2013. Therefore, some of the measures are beginning to bear fruit.
Resolve impasse in coal, iron sector: Issues over the environmental and land clearances that have come up due to judicial interventions should be inquired into, but new blocks should continue to be auctioned.
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