Under attack for a 1980s-style budget with no great reform message, P Chidambaram defended himself in a brief interview with Business Standard.

He argued that reforms did not have to be introduced only through the Budget, and that he had done the best possible. Excerpts:

You had led people to expect big cuts in tax exemptions.

We've removed a number of exemptions. MAT has been extended to 10A-10B companies, exemptions under 36 (1)(viii) have been pruned, a couple of provisions due to lapse were allowed to �

You're still losing half your revenue to exemptions.

Whatever could be removed, has been removed � it's a continuous process; these exemptions have been there for many years. The revenue foregone will reduce as exemptions go. It has fallen from 56 per cent last year to 50 in 2006-07.

The 2007-08 tax projections seem unduly conservative.

You can't assume you'll have the same buoyancy each year. I've already said I'm hoping to get Rs 7,000 crore more from better tax administration.

Why haven't excise and service tax rates converged?

Who said there would be convergence? The Goods and Services Tax is supposed to happen on April 1, 2010. We have to agree on what the converged rate will be.

The party has attacked you on inflation. Why didn't you attack the agriculture minister for his role?

The Budget is not intended to praise or attack anyone. I've never said the problem was a supply-side one, I said there were demand-supply mismatches. I haven't noticed anyone attacking me on inflation. I do my job, that's all.

The Economic Survey says futures trading is not the problem, yet you're banning it.

The Survey is the view of the economics division of the ministry, which enjoys a fair degree of autonomy. What was reported to Parliament was a decision of the Forward Markets Commission, which is a regulator. As for the impact of futures, that's why the Abhijit Sen committee has been appointed.

What is the Budget's big message?

There has to be growth before its gains can be redistributed.

The price-based excise on cement takes you back to the inspector raj days �

What reforms have we rolled back? There are no inspectors in cement; it will be based on the stamped maximum retail price.

Are you convinced the government's money is being well spent?

I have a lot more money; I have to spend it. I'm spending it in areas that deserve more spending.

Does this Budget tackle inflation? Surely the small cuts in excise and customs aren't enough to impact prices?

Inflation can only be moderated, it can't be targeted. We moderated it when we came to office, we'll do it again. The duty cuts are disinflationary.

Till recently, when the RBI was trying to slow liquidity, you were exhorting banks not to raise interest rates�

All I was saying to banks was that their Net Interest Margin was high enough, that they could be more efficient. I was saying rebalance, lend to areas that are more productive, to areas that are not overheating.

At a press conference in Delhi after the presentation of the Budget 2007-08, the finance minister answered a few more questions posed by journalists.

On rating the Budget on a scale of one to five

On a scale of one to five, I can't pick a number above five! And if I had to rate it on a scale of one to ten, I wouldn't be able to pick a number above ten!

On how this Budget compares with the 1997 "Dream Budget"

Every Budget takes place in a political and economic context�. In 1997, one dreamt a different kind of dream.

In that year, we wanted to tell the world that we were ready to join it and were willing to accept the responsibility of being a rising economic power. In 2007, we want to tell Indians that they are a part of the growth process.

On inflation

If you see the Budget speech, paragraph 8A about inflation was added this morning to take in the latest developments. �Inflation can be fought on three fronts.

The first is on the fiscal side, such as cutting taxes and duties, which I have announced in Part B. The second is monetary, which the Reserve Bank has done by raising the repo rate four times and cutting the cash credit ratio four times last year. The third is on the supply side. India must produce enough food � wheat, rice, pulses, sugarcane, edible oils � to feed itself.

The surest way to increase supply is to raise production and productivity in agriculture, and that is what I have provided for in the Budget � There is no such thing as a right rate of inflation.

Once upon a time we were tolerating inflation of 10 and 12 per cent and once upon a time there was inflation of 22 per cent. Please remember 1979 and 1974. But today the tolerance level of the people of India for inflation appears to be 4.5-5 per cent and therefore every endeavour is being made to moderate inflation at that tolerance level.

On the UPA's performance on inflation management

In 1998-99, for 11 weeks inflation was well above 6 per cent. In 1999-2000, it was well above 6 per cent for 48 of the 52 weeks � in fact, it was above 7 per cent for 22 weeks and above 8 per cent for 12 weeks in that year.

In May-June 2004, when the UPA government came to power, inflation crossed 6 per cent, went up to 8 per cent and we moderated it to 3.8 per cent. So, the government has moderated inflation in the past and can do it again.

What is the nominal GDP growth projected for 2005-06?

It is 12 per cent for 2005-06. If you deduct the rate of inflation from this, you will get the real GDP growth rate.

On bringing employee stock option schemes (ESOPs) under the Fringe Benefit Tax (FBT)

First, I am glad everyone agrees that ESOPs are a fringe benefit. It is usually given by companies to executives at the very top, but in the US, many companies are moving away from it.

What we are saying is that we will tax ESOPs only when the option is exercised and only the difference between the price and the cost. So the amount we expect to get from ESOPs can't be quantified. But since it is a fringe benefit, it must be taxed.

What prompted you to tax cash withdrawal of Rs 10,000 per day?

This is not intended to be a revenue-generating measure. This is an anti-tax evasion measure. Large amounts of cash are withdrawn for no purpose and these disappear into a black hole. The idea is that on every withdrawal of Rs 10,000 you pay a small tax of Rs 10.

A lot of people are not complaining about the purpose of the tax but the tax rate. I am surprised that such a small part of the whole Budget has come in for so much criticism. Nobody is being penalised through this measure, but I will go by what Parliament decides on this.

You have projected a 21 per cent growth in tax collections despite the slippages in excise and corporation taxes in the current year.

We are on target in three of the five tax categories. On income tax, we have got much more than the target while on service tax we are on target.

We will fall short in corporation tax and excise duty, since banks and petroleum companies have paid lower tax this year. My main worry is on excise. Excise collection is growing at a moderate rate, partially because exports, which are growing at 20-25 per cent, get excise credit.

Our view is that the tax projection is quite reasonable. It is better to set the bar a little higher for the revenue department. Detailed calculations have gone into the tax projections and we will do our best to achieve it.