India's economy can only become stronger: Chidambaram

Asserting that the economy is going to become stronger due to efforts of the present United Progressive Alliance government, Finance Minister P Chidambaram on Saturday said the current account deficit has been brought down significantly to $32 billion and fiscal deficit contained within the target in 2013-14.

Chidambaram, however, said there has been shortfall in overall tax collection in the last fiscal.

"We are completely satisfied that we will achieve the fiscal deficit target as projected in the interim budget (4.6 per cent of gross domestic product during 2013-14).

"The news on Current Account Deficit is of course extremely good.

“The CAD for the year that ended will be only $32 billion as against the previous year's $88 billion," he said in a media briefing at Congress party office in New Delhi.

The CAD has not only been fully and safely financed but $28.5 billion has also been added to the reserves, he said.

The CAD in 2012-13 was at 4.7 per cent of GDP and in 2013-14 it will only 1.7 per cent, the Finance Minister said.

"So these are good signs. . .The economy going forward can only become stronger," the Finance Minister said.

To a query on recent rise in stock market and Modi factor, Chidambaram said: "if you attribute every rise to quote unquote to borrow your language 'Mr Modi is coming' then every dip must also be attributed to Mr Modi is coming.

“Please don't make that fatal mistake. What has this got to do with who is going to be elected on May 16 (the vote counting day)".

He said what is happening in the capital market is a reflection that investors are becoming more confident about the stability and strength of India's economy.

Talking about tax collections, Chidambaram said the revenues are "more or less as expected".

In the direct taxes segment, government has collected about Rs 5,500 crore (Rs 55 billion) more than the revised estimate (Rs 6,41,835 crore or Rs 6,418.35 billion) during 2013-14.

On indirect taxes, government has achieved the target for Customs, but in the Central Excise and Service Tax segments there has been a shortfall ‘resulting in a net shortfall of indirect tax of about Rs 17,000 crore (Rs 170 billion)’, he said.

Chidambaram further said the slowdown in the economy was caused by high government expenditure, fiscal deficit and CAD, and consequent inflation.

"So in the last 20 months my job has been to attack the problem. We have attacked the problem of fiscal deficit.

“We have attacked the problem of CAD.

“Both have been contained. “Once these two problems are contained, going forward you will find that investment would pick up, both domestic and foreign investment will pick up," the Finance Minister added.

He also said the Cabinet Committee on Investment chaired by Prime Minister Manmohan Singh has speeded up implementation of large infrastructure projects.

The CCI and project monitoring group has been an outstanding success, he said.

"I am very happy that the idea of CCI has now been vindicated.

“The greater vindication is coming from the fact that 15 states have come to the Cabinet Secretariat seeking advice and guidance on how to set up similar PMGs in respective states.

“I sincerely hope that every state will set up a cabinet committee and a PMG for projects that are being implemented in their states, he added.

Out of these 169 projects taken up by the CCI, in 108 projects "we have almost completely resolved the outstanding issues. . . (and) as a result. . . these projects are moving forward", he said.

Fresh loans to the extent of Rs 1,02,292 crore (Rs 1,022.92 billion) have been released to the project promoters.

Of all the 169 projects, the total project cost is Rs 8,37,632 crore (Rs 8,376.32 billion) and the loan sanctioned by banks to these projects is Rs 2,92,658 crore (Rs 2,926.58 billion).

The outstanding loan as of February 28 was 2,28,288 Crore (Rs 2,282.88 billion), which means roughly 70 per cent of the sanctioned loan has been disbursed, Chidambaram added.

To a query related to the Adani Group, considered close to Gujarat Chief Minister Narendra Modi, Chidambaram said he is appraised about various issues by investigating agencies.

"I am briefed from time to time about the enquires that are being conducted by various agencies -- that is a matter of routine briefing. . .The Adani Group has figured in such briefings but right now I cannot tell you the details of each case," Chidambaram said.

He also added that ministers ‘do not give directions’ on individual cases.

Asked if the Central Board of Direct Taxes was suspicious about investments in the capital market made by certain foreign individual investors through Participatory Notes, Chidambaram said he was not aware of it.

"The P-note issue was addressed three-four years ago.

“Investment through P-notes is a regulated activity," he said.

Image: A girl wears colours of the tricolour; Photograph: Reuters