Economy is stressed; hard decisions soon: Chidambaram
New Delhi: The government plans to take some "hard decisions" to trim wasteful expenditure and curb the import of inessential items to deal with the stressed economic situation, although there will be no hasty increase in petrol and diesel prices.
"We are going through a period of stress...We have to take some hard decisions. Many of these measures are being taken and many measures will be announced in the next few days and weeks. Some measures to curb import of inessential items will also be announced," Finance Minister P Chidambaram said while winding up a debate on the Appropriation Bill in the Rajya Sabha.
"When you are facing a gloomy situation, wasteful expenditure has to be curbed...You call it austerity measures, you call it cut in non-plan expenditure...While we must continue to spend and continue to find money for productive investment," he said.
On concerns expressed by members of Parliament on fuel prices, Chidambaram assured them the government will not take any decision in haste to increase diesel and petrol prices.
"No decision has been taken. No decision would be taken hastily and certainly no decision will be taken without weighing the pros and cons of the larger public interest," he said.
On the rupee, the Finance Minister said the domestic currency has shown improvement in the past few days but he is keeping his fingers crossed.
"We are fighting many unknown factors in the currency markets. Yes, the currency has appreciated in last 3-4 days. But I keep my fingers crossed," he said.
The rupee, which fell to almost 69 against the US dollar last month, has started strengthening on the back of announcements by new RBI Governor Raghuram Rajan. The rupee rose 77 paise yesterday to close at 65.24, the highest level in almost two weeks.
Chidambaram said steps have been taken to increase foreign fund flows and more are being planned.
Chidambaram also spoke about the stimulus packages, days after blaming them for the current economic mess in comments that were seen as an attack on his predecessor Pranab Mukherjee, who is now the President.
"We allowed the fiscal deficit target to breach. We allowed CAD to swell. I blame nobody. We include all of us in government, we include all in Parliament," he said.
Chidambaram said that like India, many countries had provided stimulus packages to help the industry tide over the impact of the global financial meltdown of 2008.
The stimulus, he said, had its consequences on the fiscal deficit and the current account deficit (CAD).
"We anchored growth but that resulted in some consequences. The fiscal deficit went high, to what I call unacceptable (level). CAD swelled," he said.
Referring to price increases, Chidambaram said although Wholesale Price Index inflation was about 5-6 per cent, retail inflation was high.
Inflation, he said, had to be tackled by addressing supply-side constraints and removing distribution bottlenecks.
"First step is to focus on supply side. Distribution side is antiquated...We have to focus on distribution system also," he added.