Chidambaram for political consensus over actions to lift eco

Facing all-round attack, Finance Minister P Chidambaram Tuesday appealed for political consensus on a set of common actions and programmes to lift the economy from its difficulties.

Updated: Aug 27, 2013, 22:27 PM IST

New Delhi: Facing all-round attack, Finance Minister P Chidambaram Tuesday appealed for political consensus on a set of common actions and programmes to lift the economy from its difficulties.

Speaking in the Lok Sabha, he said what the country needed was more reforms, less restrictions and a more open economy besides an end to impasse in coal and iron ore sectors to boost the economy.

The Minister also said all options including issuance of sovereign bonds are on the table to deal with widening Current Account Deficit (CAD) and the decelerating value of rupee that touched 66.30 to a dollar.

A grim looking Chidambaram took the floor after a four-hour discussion on the current economic situation when Opposition members attacked him, Prime Minister and the government for "playing" with the economy and bringing it to the brink of a crisis.

It is better that the government, which is unable to tackle the situation, goes and people given an opportunity to elect a new government, said BJP leader Yashwant Sinha, a view shared by some others.

Replying to the debate, Chidambaram admitted that the situation was "grave" and said the country expected political parties to say what they would do in the next few weeks and months "but the hard fact is there is no agreement".

"Let us not fool ourselves. There is simply no agreement on what we will do...If Parliament is not able to point to the direction in which the country's economy will go, Parliament is not able to agree on say 10 steps which the government should take, what kind of message will it send to the rest of the world," he said.

Referring to the sharp differences on projects which have been stalled, Chidambaram said, "My plea to everyone is that despite our difference, can we agree upon some measures which have to be taken in order to lift the country's economy from what it is today at 5 percent growth to what we had between 2004-08.

"I believe even though the polity is divided, it is possible to weave together a tapestry of common actions and common programmes on which there can be some differences but basically we can all agree that this is the direction in which we should go."

Stressing that India cannot afford to grow at less than 8 percent, Chidambaram listed 10 steps including promoting of manufacturing sector and exports to achieve potential rate of growth.

Defending the government's actions to address economic woes, he said, "What we need now is not less reforms but more reforms; not more restrictions but less restrictions; not a close economy but a more open economy."

Referring to the steps being taken to restrict fiscal deficit to 4.8 percent of the GDP, the Minister said he had drawn red line and that will not be crossed.

"We will go through some pain, by the end of the day, I am sure we will be able to emerge stronger", he said, adding all efforts would be made to bring down the Current Account Deficit (CAD) to USD 70 billion from USD 88.2 billion during the 2012-13.

On a specific question of India issuing sovereign bonds to raise overseas funds, Chidambaram said, "All options are on table...Government will exercise its judgement at appropriate time. We must add to our reserves".

Referring to the 10 steps which included promoting exports, reviving investments, containing fiscal and current account deficits, raising capex of PSUs, recapitalising PSU banks, Chidambaram said, "If we are patient, firm and clear headed and once we take these steps, the economy will begin to turn and we will be able to build a strong economy."

Elaborating on the 10-point growth programme, Chidambaram said steps have to be taken to contain fiscal deficit and CAD, improve investment climate and add to the forex reserves.

The Minister also underlined the need for providing more funds to the PSU banks and ensure that the capital expenditure programme of state-owned companies are as envisaged.

Chidambaram said all efforts will be made to reap the full benefits of good monsoon and added that government will make available gas to the fertiliser plants.

The Minister made a case for encouraging the "manufacturing sector as the country cannot become a strong economy without a strong industrial sector".

Besides, he said all efforts will be made to encourage exports and end the impasse concerning mining of coal and iron ore and land acquisitions, environmental clearances.