....political logjam may hit key reform measures

Financial sector reforms can be game changers: Chidambaram

The political logjam may affect gamechanger legislative measures such as Direct Tax Code, Goods and Services Tax and increasing foreign direct investment limit in the insurance sector, the Finance Minister, P Chidambaram, apprehends.

"Each of them requires building of a broad consensus. ...consensus is built over several months of hard work and then consensus crumbles when is hit by a seizure of political opportunism," Chidambaram said while inaugurating the fourth edition of the Delhi Economic Conclave. This year the theme is Agenda for next five years.

What's on the list

Listing the agenda for the next five years, the Finance Minister said while fiscal consolidation will be on top, containing inflation will be equally important. At the same time continuation of financial sector reforms will also will important.

Talking about fiscal consolidation, Chidambaram reiterated his aim to bring the fiscal deficit to 3 per cent by 2016-17. Containing revenue deficit will be equally important.

"Borrowing should finance investment and not consumption," Chidambaram said.

On the current account deficit, the Finance Minister said, "India cannot finance a CAD of the order of $88 billion as we did in 2012-13. Nor can we allow import of gold of $50 billion or more. Nor should India import coal when it has coal in abundance, nor should India tie itself in policy knots and be forced to import commodities which they have the capacity to produce and manufacture."

Paying the price for inflation

Inflation, which was one of the key reasons for Congress' defeat in the State Assembly elections, did figure prominently in the Finance Minister's speech. "Government of the day will have to pay the price for the current rate of high inflation," he said.

shishir.s@thehindu.co.in

(This article was published on December 11, 2013)
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