5-yr fiscal consolidation plan soon: FM

No one will have confidence in the Indian economy if there is uncertainty about the fiscal stability of the country,Chidambaram told a news conference.

It is our intention to announce a credible and feasible path of fiscal correction beginning this year and ending in the fifth year of the 12th plan,which ends in March 2017.

In recognition of mounting worries over public finances,Chidambaram,after taking over the ministry in August,appointed a committee led by a former official,Vijay Kelkar,to recommend ways of improving government finances.

In its report,the Kelkar panel suggested slashing fuel,food and fertilizer subsidies urgently to curb a deficit it said could hit 6.1 percent of GDP this fiscal year.

Chidambaram did not give details of his plans for fiscal prudence,but said he was waiting for more feedback on the Kelkar report.

To shore up its balance sheet,the government last month raised the price of heavily subsidised diesel and cut supplies of subsidised cooking gas despite strong political opposition,including from within its own coalition.

In March,the government had promised to narrow the fiscal deficit to 5.1 percent of GDP this year from 5.8 percent last year. But analysts doubt New Delhi will come good on that commitment.

The investment rate in the Indian economy is seen picking up in the third quarter of the current fiscal year that ends in March 2013,Finance Minister P. Chidambaram said on Monday.

India8217;s investment rate has fallen to 32 percent from 38 percent in 2007/08. Analysts say investment needs to pick up before the economy returns to the 9 percent growth it was clocking before the 2008 global financial crisis.

Absence of reforms will slow growth: Chidambaram

PTI Cautioning that absence of economic reforms will slow down growth,Finance Minister P Chidambaram today said political parties may oppose but should not obstruct decision making.

8220;Every government is entitled to lay down policies. Opposition to policies is legitimate,obstructionism is not,8221; Chidambaram said while addressing the annual Economic Editors8217; Conference.

8220;The government of the day must be allowed to lay down policies,pass legislations wherever necessary,and get on with the job of implementing those policies,8221; he added.

Noting that these were challenging times,the Minister said,8221;Without reforms,we risk a sharp and continuing slowdown of the economy which we cannot afford given the imperative need to generate jobs and incomes for a large population,most of whom are young.8221;

India8217;s economic growth during 2011-12 slipped to nine- year low of 6.5 per cent and during the first quarter of the current fiscal it was 5.5 per cent.

Expressing confidence that with requisite savings and investments India8217;s economic growth rate will recover to 8 per cent and more,and perhaps touch 9 per cent,the Minister said,8221;We should keep that rate of growth as our objective and progress towards achieving that objective.8221;

The government recently took host of reform initiatives but steps like hiking FDI cap in insurance and pension to 49 per cent would require legislative changes,which would not be possible without the support of main opposition party BJP.

8220;Long standing structural reforms required to achieve high investment and high growth rates have been held back because of many reasons.

8220;Among them are8230;the need to forge a consensus on reforms,the practical necessity to garner support across the political spectrum to pass legislation8230; Nevertheless we are now addressing the difficult areas of reforms8221;,he added.

Referring to the government decision to allow FDI in multi-brand retail,Chidambaram said,8221;We must not fear foreign investments in India. We have the sovereign right to decide where and how foreign investments would be allowed into India.8221;

The decisions to allow foreign investment should not be tested on the basis of undefined ideology or theory,but on a clear-headed assessment of the advantages that would accrue to India,he said.

8220;I have no doubt8230;FDI in retail,aviation and FM radio broadcasting are decisions that will benefit the economy and the country,8221; he added.

Chidambaram also underlined the need for containing inflation and said that appreciating value of the rupee would help in brining down the cost of imported crude,petroleum products and fertilisers.

8220;The value of rupee is an important factor that effects the value of imports. A depreciating rupee will also impact trade and investment. Hence,the need to stabilise the exchange rate. I believe that we have met with moderate success,8221; the Minister said.

The rupee,which touched 57.22 to a dollar on June 27,2012,has gradually appreciated to 52.13.

The other important task before the government was to contain fiscal deficit,he said,adding,8221;no one will have confidence in the Indian economy if there is uncertainty about the fiscal stability of the country8221;.

As regards the Kelkar Committee on fiscal consolidation,the Minister said that it has presented the worst-case scenario and it was the duty of the government to take steps to avoid that and 8220;do every thing possible to contain deficits8221;.

The government,Chidambaram added,will shortly announce a fiscal consolidation programme based on the feedback on the Kelkar Committee report.

Chidambaram said reforms are required in coal,mining,power,petroleum amp; natural gas,as well as infrastructure sectors to help create jobs

8220;There should also be no controversy over reforms in the coal,mining,power,petroleum amp; natural gas,and infrastructure sectors including roads,railway and shipping.

It is these sectors that are the drivers of growth,8221; he said. Chidambaram said the first comprehensive Cabinet paper on allowing FDI in retail was prepared by the NDA Government in 2002,in which it acknowledged that FDI in retail was essential to improve the supply chain in agriculture which alone will bring benefits to both producers and consumers.

8220;That paper also endorsed the argument that FDI in retail will generate millions of jobs. The idea was never rejected.

So,why should there be a controversy when the Government announced its intention to lay down guidelines in order to enable FDI in retail,8221; he questioned.

The government had last month had allowed 51 per cent FDI in multi-brand retail.

Saying that the implementation of FDI is left to the discretion of the states,Chidambaram said,8221;The controversy over FDI in retail is,in my view,unnecessary and unjustified8221;.

HIGHLIGHTS

Global problems,high inflation and declining investments responsible for slow growth: Finance Minister P Chidambaram

Reserve Bank8217;s tight money policy dampened growth and investments: Chidambaram.

We should aim at 8-9 per cent economic growth: Chidambaram.

Without reforms the economy would be at risk and it would not be possible to create enough jobs: Chidambaram.

Fiscal and monetary policy must act in tandem to promote growth: Chidambaram.

First draft on allowing FDI in multi-brand retail was prepared by the NDA government: Chidambaram.

Chidambaram hopes to resolve issues related to GST soon; to meet Empowered Committee Chairman Sushil Modi on October 22.

India8217;s insurance sector needs USD 5-6 billion: Chidambaram.

RINL disinvestment by month-end: Chidambaram.

Unless there is specific allegation of quid pro quo,government can8217;t probe private deals: FM on DLF-Robert Vadra controversy.

Government will not wait for Budget to take action on Shome panel report on retrospective tax amendment: FM.