OilMin, RBI over-cautious in seeking Election Commission nod, says FM

Chidambaram stressed that the government has no role to play in the process of granting new bank permits. “RBI Governor Raghuram Rajan has made it clear that he referred the decision to the Election Commission out of abundant caution,” he said responding to another query.

Stressing that the process of granting bank licences should not be interrupted, the finance minister said that its interruption would send a signal to the world that the government has a role to play in the grant of these permits.

The Election Commission was set to meet on Monday to decide on the big ticket proposal but its meeting was postponed dashing expectations of any announcement on new bank permits in the RBI’s monetary policy statement on Tuesday.

Meanwhile, responding to a query on the postponement of the gas price hike, Chidambaram said, “There was no obligation of the ministry of petroleum and natural gas to send it to the Election Commission. The decision by the Cabinet was taken some two to three months ago. I think they did it out of abundant caution.” Defending the Cabinet decision, he further said, “The Cabinet decision is the right decision and I will defend it. Today, we are importing one unit of gas at a much higher price.” Based on the Rangarajan formula, the Cabinet Committee on Economic Affairs had in June 2013 approved an increase in gas prices from April 1, 2014, which was notified in January this year. But the Election Commission has ordered its deferment on the grounds that it should be the decision of the new government formed after the General Elections.

‘Current account deficit likely to be $35 billion’

NEW DELHi: Defending the economy’s health from jibes by the principal Opposition — the Bharatiya Janata Party, finance minister P Chidambaram on Monday announced that the current account deficit will be about $35 billion and indicated that some of the curbs on gold imports may be relaxed.

“We could consider some relaxations in consultation with the Reserve Bank of India,” said Chidambaram, adding that some banks have already been allowed to import more gold.

At a press briefing to showcase the improved economic conditions on the last day of FY14, the finance minister also highlighted the current account deficit that has not only been controlled at about $35 billion but with addition to foreign exchange reserves that is estimated at $325 billion this fiscal.

Chidambaram also stressed that the lower fiscal deficit as the “biggest achievement” since his return to the finance ministry 20 months ago. “It is the first sign of whether the economy is stable or not…nobody talks about a downgrade anymore … we have managed to do even better than the roadmap laid out by the Vijay Kelkar committee.”

However, data released by the Controller General of Account revealed that the fiscal deficit exceeded the target of Rs 5,24,539 crore to touch Rs 5,99,299 crore or 114.3 per cent of the revised estimate between April and February this fiscal.

The revenue deficit too Rs 4,34,378 crore or 117. 3 per cent of the RE of Rs 3,70,288 crore in the period. “The economy today is far more stable and far stronger than what it was 20 months ago and what we feared might happen has not happened. And going forward, I can only see spirited growth in the economy, provided the next government adheres to the 10-point agenda that I have outlined in my interim budget,” Chidambaram stressed. The minister also announced his intention to take up the issue of black money in foreign banks with the Swiss finance minister at the G-20 Summit on the sidelines of the Fund Bank spring meetings in Washington in April. ENS