|Chidambaram: Policy pill
● Check fiscal deficit
● Check CAD
● Improve forex
● Improve PSU capital spending
● Recapitalise banks. Annual budget had promised to pump in Rs 14,000 crore into PSU banks
● Take advantage of good monsoon by improving
in power tools, steel, metals,
exports to narrow down CAD
● Remove bottlenecks in coal and iron ore mining, land acquisition
New Delhi, Aug. 27: Finance minister P. Chidambaram today tabled a 10-point plan to revive the faltering economy in the Lok Sabha, listing a check on fiscal deficit, the revival of manufacturing and a squeeze on imports of items such as power equipment and automobiles in his priority agenda.
Chidambaram’s action plan also focussed on speeding up stalled projects, containing current account deficit, increasing foreign exchange reserves and exports as well as resolving issues that have blocked iron ore and coal mining and land acquisition.
“What we need now is not less reforms, but more reforms, not more restrictions but less restrictions, not a closed economy but a more open economy,” the minister said in reply to a debate in the Lower House.
During the four-hour debate today, the Opposition savaged the government for its alleged inability to remove economic bottlenecks and save the rupee, which plunged to a new low today.
Chidambaram blamed “the developments of May 2013 when the US Federal Reserve began talking of ending quantitative easing”, which sent the world economy into a tailspin and affected currencies across the globe.
Heading his list of 10-point measures is a check on fiscal deficit, which will happen only if the country can contain current account deficit and improve its foreign exchange reserves — steps two and three on the list.
Number four on the list is the restoration of the investment cycle by resuming stalled projects. He pointed to a long list of projects that the Cabinet Committee of Investments had cleared as proof.
The finance minister listed as measure five the government’s attempts to get state-run companies to speed up spending on promised projects.
Chidambaram listed as sixth a move to recapitalise state-run banks. In his annual budget, he had promised to infuse Rs 14,000 crore into state-run banks, which will increase credit availability manifold.
“Taking advantage of a good monsoon” to revive the economy is step number seven. Farm credit would be made available beyond the budgetary allocation, while fertiliser inputs would be increased.
Measures eight and nine deal with manufacturing and export stimulus.
“Manufacturing in the power (equipment), steel, metals, automobiles, electronic hardware and textiles will be encouraged,” he said.
Officials added that incentives to attract investment in manufacturing and disincentives to import these products by way of higher taxes would be brought about.
“We must encourage exports. This is the only trajectory to narrow down the CAD.”
“Of the top 20 imports, there are many things which we should not have imported. Why are we importing electronic goods that are made by Indian engineers abroad? We must increase production in electronics and textiles,” Chidambaram said.
“If television sets are not imported into India, they will be manufactured in India. That is what we want.”
The finance minister closed his list with measures to remove bottlenecks in iron ore and coal mining as well as land acquisition for industry.
“Parliament must assert itself,” he said. “For every small single decision (on mining), we have to run to Supreme Court appointed benches and committees,” he added.