Tuesday, May 25, 2004

Finance: Chidambaram's first press conference

Reports on The Hindu, Financial Express, Business Standard

  • There will be a full budget presented and not vote-on-account.
  • There may be some policy announcements before budget.
  • Budget session will begin perhaps late June.
  • Chidambaram believes the economy is in a resilent mood in terms of growth, inflation and balance of payments situation.
  • There will be a major emphasis on agriculture, manufacturing and emplyment generation.
  • There will be massive public and private investment to influence growth, jobs and income.
  • However Chidambaram is confident that this will not unduly increase fiscal deficit and will fit within the Fiscal Responsibility and Budget Management Act 2000.
  • India to be made shining for all Indians...
Adi Godrej, on NDTV, set the agenda for the finance minister, from his viewpoint. He concurred that it is possible to increase investments in agriculture and manufacturing and still manage the fiscal deficit.
  • Manufacturing needs excess capacity. Over the last few years, all the excess capacity has been utilised.
  • If the economy has to grow by 8%, the industrial sector has to grow by at least 12%+
  • Specific sops to be given to investments in manufacturing sector, as that would result in increased job creation
  • Tax net to be widened.
  • Import tariff to be reduced and rationalised in the following form: Lowest tariff for raw materials coming in, and maximum for finished goods, where even this should be only 20%. Intermediate rates for semi-finished goods.
  • Finance minister should target zero revenue deficit by 2006, and fiscal deficit to be not more than 4.5% of GDP.
[For the readers: If you want to know more about the FR & BM Act 2000 - Rediff column, and here is an article which doesn't concur with the need for the FR & BM Act from Countercurrents.org and on why fiscal deficit need not have to be reduced on Financial Express. However IMF's Chief Economist Raghuram Rajan has his views on fiscal deficit in India.]

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