Chidambaram pledges more reforms , says 'do not panic'

Despite rupee hitting an all time low and the economy undergoing a dull phase, the Government on Thursday chose to tow the “All is Well” line as Finance Minister P Chidambaram belted out a slew of forward looking measures to sooth investor sentiments and spur economic reforms, though their impact may take some time to leave the desired effect.

Making it clear that the Government will open up all the sectors, Chidambaram said in a press conference that the Government will review every FDI cap which exists and will make sure to open up those areas. Not showing any concern for the shaky economic scenario, the Finance Minister came on the front foot and announced that there won’t be any cut in expenditure and whatever allocations have been promised to ministries in the Budget would provided to them.

Continuing with his bold stance, Chidambaram added that the Government will expedite around 30 to 40 big ticket private sector projects in order to boost economic growth in the coming few days while indicating that some major investor-friendly measures would be announced between now and August this year. Unresolved issues like pricing of coal and gas, too, would soon be resolved along with the critical issue of coal allocation to power plants, he said.

Expressing satisfaction on reduced net gold import which have shown marked fall in the last three weeks, the Finance Minister said that he would be happier if they come down further though adding at the same time that he does not want to be “unpopular” with the common man by further increasing import duty on the yellow metal’s shipments.

A reduction in gold imports would dramatically change the current account deficit (CAD) position in the country, the minister said.

Speaking to the media after an eventful Wednesday, which first witnessed a historic rupee fall and later saw some good news coming when Fitch upgraded its rating outlook on India, Chidambaram said there was no need for panic over declining rupee as it would regain the losses suffered in last few days. 

“There is no reason for panic. . . Countries with large current account deficit have taken a hit on currencies. Rupee will find its level. We are concerned about volatility. It (rupee) will regain losses suffered in the last few days,” he said.

Painting a rosy picture of the not so distant future, he said, “I am looking forward to more reforms. . . I expect a number of decisions in the next few days and weeks. . . . In June, you can expect number of decisions taken and implemented that will accelerate reforms and spur investments in critical sectors.”

On FDI cap review, the Finance Minister said that Sebi will take a decision on KM Chandrasekhar committee report on rationalisation of foreign investment norms on June 25.

With cricket talk dominating news these days, Chidambaram, too, chose to stick to cricketing parlance as he said, “reviving economy, rejuvenating investment sentiment might be slow, but if we don’t take our eyes of the ball, desired results are achieved.”  On FDI liberalisation, Chidambaram said things were in the last lap. The report of the Committee headed by Economic Affairs Secretary Arvind Mayaram will be available by next week. After that he and Commerce Minister Anand Sharma would meet and take the issue to Prime Minister.

“We are looking at every sector. The principle is very simple. Does the FDI cap serve any purpose todayIJ If it does, we will keep that gap. If not, the cap should be either relaxed or removed. That is the mandate of the committee and it is in the final stages. We are looking at all sectors including defence.”

Further to this he made it clear that Government will not compress expenditure this year and whatever has been provided to ministries will be made available to them. They are being encouraged to accelerate spending.

He said in the first month of April both Plan and Non-Plan expenditure have been according to the target. “Public spending, Government spending will help the growth process. I will not compress expenditure. I will also achieve my revenue target. Revenue collection are broadly satisfactory both in direct and indirect taxes.”

The Minister also said the fiscal deficit target of 4.8 per cent for 2013-14, which appeared too ambitious, was imminently achievable. Meanwhile, Prime Minister Manmohan Singh on Thursday directed the setting up of a special group to fast-track them and it is expected to clear up to 40 such projects by next month.

Singh issued the order for setting up the Project Monitoring Group within the Cabinet Secretariat at a meeting that discussed the status of 215 investment projects which are stuck because of lack of various clearances and other factors.