Finance Minister P Chidambaram Tuesday said the Indian economy needed deeper reforms but political differences would have to be overcome for them to work and bring about a recovery from the low growth rate and high current account deficit. Let us not fool ourselves. There is simply no agreement now on what we will do, Chidambaram said in the Lok Sabha as he proposed a 10-point programme and insisted that Parliament must point to the direction in which the countrys economy should move. The sombre assessment by the finance minister came at the end of a four-hour discussion on the economy,during which he said everyone would have to suffer some pain in the short run as the government strives to bring down the fiscal and current account deficits. I believe even though the polity is divided,it is possible to weave together a tapestry of common actions and common programmes on which there can be some differences but basically we can all agree, Chidambaram said. The finance ministers plea for support came in response to sharp criticism from BJP leader Yashwant Sinha,who had accused the UPA government of playing with the economy. The minister said agreeing on measures that need to be taken would provide the means to lift the growth rate of the economy from what it is today at 5 per cent growth to what we had between 2004-08. Chidambaram also said that between 2009 and 2011,the UPA government had allowed the fiscal deficit to be breached and.current account deficit to swell because of certain decisions that we took during the period. President Pranab Mukherjee was the finance minister then and the measures taken included a sustained rise in government expenditure to help the economy recover from the impact of the global financial meltdown of 2008. The minister accepted that domestic factors such as these accentuated the 20 per cent fall in the value of the rupee since January. There are not just external factors,there are also domestic factors. We recognise that there are domestic factors, he said. The rupee breached a new low of 66.30 against the US dollar in intra-day trade Tuesday. But Chidambaram reiterated that the government would contain the current account deficit at $70 billion and said all options to finance it were being considered. Significantly,the minister in his reply to a short duration discussion on the economy did not rule out the possibility of issuing sovereign bonds. I cannot open a debate on sovereign bonds. All options are on the table,the government will take a call. The minister,who was speaking a day after the Lok Sabha passed the Food Security Bill,was however clear it would not breach the fiscal numbers. The deficit will be kept in check at the budget target of 4.8 per cent of the GDP,he said. India cannot afford to grow at less than 8 per cent per year and needs more reforms to revive growth, Chidambaram said. On problems being faced by power and other infrastructure sectors on clearances he said,This impasse will affect any government in future. We will have to find a way in which we are respectful to Supreme Court,we must recognise the authority of Supreme Court,but also assert the authority of Parliament and executive government. Other than a check on deficits,the reforms agenda includes revival of the investment cycle,pushing through the capex programme of public sector firms and capital infusion in public sector banks. He also underlined the need to reap the benefit of the good monsoon,encourage manufacturing and exports as well as resolve the impasse in coal and iron ore sector to encourage domestic production and exports.
