Three hours after he had notched up his triumph—-the Left's and the BJP's objections had been drowned in a shout—-he retained his faith in the budget which he himself has started calling the "Chidambaram budget."
With the Finance Bill through, what is topmost on your priority list now?
My top priority is to deliver on the promises made in the budget. There are a number of initiatives spelt out in the budget speech. I just made a check this evening, 10 of these have already been delivered. There is no reason why we should wait for 12 months to deliver the remaining promises. One has to follow closely the revenue position, financial sector reforms and one has to address sectoral issues that will arise from time to time in power, tele-com, roads, petroleum and so on. It's a packed agenda.
With exports at a record low, investor confidence down, oil pool deficit at a record high and slowdown in FI investments, how can we achieve 8 per cent growth on the basis of the supposed psychological boost the budget has given?
We are hoping to achieve 7 per cent growth rate, aiming at 8 per cent growth rate. This will come only if investment rises. What we have done in the budget is to promote savings and spur investments. If investment picks up as it should following the tax cuts that have been made, both direct and indirect tax revenues pick up and demand too following a good agriculture year where production is 192 million tonnes, we will be able to achieve a growth rate of 7 per cent. Achieving 8 per cent will depend on removing infrastructure bottlenecks. We have taken a number of measures to improve infrastructure and economic services. If they are improved, there is no reason why we should not be able to achieve 8 per cent growth.
When are petroleum prices going to be raised?
I have repeatedly said this question must be put to the petroleum minister when he brings the proposal to the cabinet. As a member of the cabinet, I'll give my views.
Considering the doubts on the new government's stability, are you confident that your voluntary disclosure scheme will yield Rs 30,000 crore so that you have Rs 10,000 crore in your tax net?
I did not put any figure on the amount that is to be raised through the VDS. Besides, I have not taken any credit for any revenues from the VDS to the Central kitty. I have also said that 77.5 per cent amount raised as taxes from the VDS will go the states. Whatever comes through the VDS is a source.
What is your road map to capital account convertibility? And when are we getting there?
The RBI has appointed a committee to give a report on capital account convertibility. The report will be released next month. Once the report comes, a decision will be taken.
How will the lower interest rates boost industry production when the real problem is with banks' attitude towards lending?
Corporates will get funds if they have tangible projects. I cannot compel anybody to lend. I can only create conditions under which bankers will lend and business will be encouraged to borrow. I believe those conditions have been created with the decline of interest rates. Let's see how business responds to the new situation.
What about the inflationary impact of liberalised credit, a high-growth budget and impending petrol price hike? What will be your inflation management policy?
Nobody can make any predictions about inflation growth in percentage points. Inflation control is essentially a function of money supply. The RBI has set its target. We intend to keep M3 growth between 15.0 per cent to 15.5 per cent. If the growth
remains with this limits, I think inflation will be within control.
Why has the proposal to tax the service sector, that contributes as high as 42 per cent of GDP, been withdrawn?
It has not been withdrawn. I have said that after the Finance Bill is passed, each association will be invited to present its views on the manner and method of tax collection. Then rules will be made and service tax applied and collected. We have added 10 new services this year. It's not possible to tax all of them immediately. The tax will be applied from a prospective date.
You had talked about a commission on public expenditure in your previous budget. Are you making another attempt to form such a panel?
When there is a favourable response from the kind of people I want to put on that commission, it will be formed. Pending that, I will continue to control expenditure through the department.
A lot of people feel that yours was an IMF-dictated budget and that 15 days later, the Pakistan finance minister presented an identical budget. What are your
comments?
A lot of people don't do their homework. If the Pakistan fin-
The World Trade Organisation, the Intellectual Copyright Act and environmental regulations are the three economic weapons, some people claim,
It is not possible to give a view on this in the course of an interview. We are members of the WTO. We have voluntarily accepted obligations under the WTO and we are obliged to stick to them. In intellectual property, there is a phase-out period. We have a 10-year period and we will stick to that period.
Do you think that the cap of $8 billion on external commercial borrowing is low, considering that industry wants further relaxation?
There is no publicly announced cap. There is only an internal cap. We will monitor the situation carefully and if the macroeconomic parameters are good, we will respond to the credit requirements of the industry.
What steps will you take to boost investor confidence?
Investor confidence will be boosted if the government makes transparent rules and guidelines and delivers on promises. If foreign and domestic investors get speedy clearances and basic amenities like land, power, water, infrastructure like roads are provided, investor confidence will be boosted. Investors have confi-dence in India. Where they lack confidence is that government is too tardy. The central, state and municipal governments must get over their natural tardiness. We must be able to respond quickly because the world expects quick response.
What steps are being taken to boost exports?
This is a question that has to be addressed to the minister of commerce. I am disappointed that the year ended with a mere 4 per cent export growth in dollar terms. There is no reason why we should be satisfied with 4 per cent. I urge the minister of commerce to look at sectors that have performed and go into the causes. Trade policy is not only a matter of macro-economic management. It also has to take into account the micro-economic management of each sector.