Deliberating on the need to narrow down the current account deficit (CAD), Finance Minister P Chidambaram today said that if we don't import gold for one year, half of our current account deficit will disappear, and the only way to meet the target is to increase exports.
The finance minister was fielding questions on the Union Budget he tabled in Parliament on February 28 from the general public on Google Hangout - a multi-person online video chat.
The finance minister was joined by select panelists including Jahangir Aziz, senior Asia economist and India chief economist, JPMorgan; Anand Mahindra, chairman and managing director of Mahindra & Mahindra; and Amit Singhal, senior vice-president, Google.
Alleviating concerns over the worrisome current account deficit figure, the finance minister said the figure is likely to be less than the provisional figure of 5.2 per cent announced in the Budget. " We will not cross the red line of fiscal deficit. It will be kept at 4.8 per cent or below." he said. This reassurance from the finance minister is expected to come as a big relief for the industry.
Current account deficit, or CAD, which represents the difference between inflows and outflows of foreign currency - had touched a record high of 5.4 per cent of the GDP in the July-September quarter.
GROSS DOMESTIC PRODUCT
"Our aim is to achieve 9 per cent growth," the finance minister said, reiterating that in the last six years the country had grown at a rate of 8 per cent.
"No doubt that we have slipped but we can climb again," he said.
DISINVESTMENT
Although it was more or less Life Insurance Corporation (LIC) that bailed out the government's disinvestment programme for the current financial year, to all's surprise retail investors also bet a lot of their money this time around.
This financial year, the government has so far raised Rs 21,500 crore against the target of Rs 30,000 crore. The department of disinvestment has said the government would try to raise Rs 27,000 crore in this financial year ending March.
Sounding positive after this success on the disinvestment front, Mr. Chidambaram said: "We will raise Rs. 40,000 crore via disinvestment in the coming fiscal year (2013-14) ... Will raise Rs. 14,000 crore more by way of selling residual stake of the government in non-government companies."
"Every single disinvestment has been a success since I took over," he added.
CAPITAL GAINS TAX
"There is no case for completely scrapping short-term capital gains tax. When there is a tax on salaries, tax on all other earnings, why should there not be a tax on capital gains ... How many countries in the world have exempt long-term capital gains tax on sale of listed shares ... The capital gains tax regime in India is fair and reasonable. I think it's a fair policy, but I'm open to suggestions on this," Mr. Chidambaram said.
UNINVESTED CASH
One of the biggest problems the Indian economy faces today is that companies and individuals are sitting on piles of cash, and do not want to invest it. This way the money gets hoarded, a bid bad for the economy.
"People, companies and public sector units (PSUs) are sitting on piles of cash. What I intend to do now is that I will ask them every quarter where they are investing. In case they have no plans, I will ask them to let the government utilise the cash," Mr. Chidambaram said.
GLOBAL ECONOMY AND INDIA
The finance minister blamed the uncertainty looming over the global economy for not being able to boost the country's economy. "We haven't gone wrong anywhere ... it is the global situation that has affected us," Mr. Chidambaram said.
"Economies have shrunk globally, we're trying to stabilise ours," he added.
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