New Delhi: Aiming to restart the growth engine, Finance Minister P Chidambaram on Monday said he will monitor every quarter the investment plans of public and private sector entities that are sitting on huge cash piles. "Each PSU is required to fill up that proforma, tell us what their capex targets are next year. We will monitor them closely beginning from April, 2013. Every quarter I will monitor what they are investing," he said in an interactive session on Google Hangout.
Chidambaram took questions from economists, businessmen, IIM student, home maker and others during the hour-long interaction on the Internet. The Finance Ministr, Chidambaram said, has already issued letters to the PSUs asking them to submit their investment plans for the next financial year. In his meetings with the public sector executives earlier, Chidambaram had said that they would be asked to pay special dividend if they failed to execute investment plans. The whole exercise was aimed at re-starting the growth engine, the Minister said, adding that the economy will grow by over 6 per cent in the next financial year and even higher in the subsequent years.
"In the current year growth has slipped to 5 per cent, but that doesn't mean we cannot get into 6 per cent or 7 per cent. I am confident we will get to 6 per cent next year and 7 per cent in the year after. Potential is 8 per cent, we are aiming at 9 per cent," he added. On what has gone wrong in the recent past, Chidambaram said, "I don't think anything has gone terribly wrong." Things started worsening after the global crisis in 2008", he said, adding, "There are some matters which have to be fixed. First is the fiscal deficit, second is the Current account deficit". The Minister said that given the limited economic space, he did in his budget what was possible. "We can't invent big bang", he said, adding there is no 'big bang' anywhere in the world faced with economic constraints.
On the 2013-14 disinvestment target, Chidambaram said: "I hope to collect my Rs 40,000 crore. We will raise Rs 40,000 crore." He said his ministry has even a sequence laid out for disinvestment and "first disinvestment will start in April, 2013. In fact, we have three coming up in March, 2013". Chidambaram said that another Rs 14,000 crore will be brought from residual stake sale in non-government companies. "SUUTI has three companies. We have a couple of other companies. So we expect to raise Rs 14,000 crore. And if I raise Rs 54,000 crore one financial year that is a success by any standard," he added.
To a query on Rs 1,000 crore Nirbhaya Fund for safety and empowerment of women, the Minister said that the proposal was not shared with too many people before it was announced. "These are ideas which have to be freshed out. We will now work with other ministries, departments and NGOs and then we will try to find how this money will be used in order to enhance security of women in public places," he said. Chidambaram further said that India's first all-women bank, proposed in the Budget, will start operations from November 2013.
On a query regarding increase in living cost of urban middle class, Chidambaram said while he understand the pressure on them, those with incomes must pay taxes. "It (urban middle class) has a certain standard of living. To maintain that standard it costs more, I am not denying that. I think while the urban middle class has reason to complain and I quite share you angst and anger, those who have incomes and those who have the money got to pay a little tax. I can't tax the poor," the Finance Minister said.
Talking about capital gains tax, Chidambaram stressed that except for some all other incomes should be taxed. "Why capital gain should not be taxed? It's another form of income. If salary can taxed, if some part of agriculture income can be indirectly taxed, why should not capital gains be taxed? What so sacred about those (who) make money in capital market? "Therefore, I don't think there is case to say capital gains should not be taxed. And not taxing capital gains is way to revive the animal spirit. Every type of income must be
taxed," he said.
Chidambaram also said the government's borrowing programme for the next fiscal was not very large. In fact, the net borrowing for 2013-14 was only Rs 5,000 crore more than that of the current fiscal. The Minister appealed to people to channelise their savings into investments.