NEW DELHI: Finance Minister PChidambaram on Monday promised more measures to revive growth and investment when Parliament debates his eighth budget, which has been largely hailed by economists as the best under the circumstances but has received an emphatic thumbs down from the markets.
Chidambaram said the final fiscal deficit numbers for the current year could be below the 5.2% projected in the budget, and promised all help to the commerce ministry in its attempt to boost exports, which he saw as the only remedy for the high current account deficit. The commerce ministry is in the process of unveiling a new trade policy.
"Budget is not a one-stop or onestage exercise. More work is being done. There will be some more announcements. We will re-look at all suggestions on indirect taxes. We will take decisions and announce them when I reply to the debate in Parliament by end of March and to the finance bill later," he said at a post-budget interaction with leading chambers of commerce. Merely because something was not announced or touched upon did not mean that those areas would be ignored, he said. Benchmark stock indices have dropped nearly 1.5% in the last three sessions following disappointment with the budget and a decline inGDP growth to 4.5% in the October-December quarter, a 15-quarter low.
Speaking at a 'Google+ Hangout' later in the evening, the finance minister scoffed at demands that tax on capital gains should be eliminated.
"Why should capital gains not be taxed? What is so special about capital gains as compared to salaries?" he said.Chidambaram said the poor demand for cars was because of high interest rates and hoped they would decline, but said it was up to the Reserve Bank of India to take a call. RBI is scheduled to announce its mid-quarter policy review on March 19. Referring to the 3 percentage point increase in excise dutyon sports utility vehicles, 98% of which run on subsidiseddiesel, he said dual pricing on diesel at retail pumps was not possible. The higher duty was to recoup part of that subsidy.
The finance minister said companies were sitting on cash piles and needed to start investing. "Growth engine is sputtering...We need to get growth going. We need to get investments going," he said, pointing that the government had introduced the investment allowance to encourage investments and he would be travelling to major cities to find out what was holding up investments.
He said the first priority of the budget was to signal that the country was on the path of fiscal consolidation. "We were at a point that if we did not declare our commitment and did not take credible steps, there would have been serious consequences."
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