Sanguine over the relative ease with which some bold economic policy decisions like diesel price “deregulation” have been taken in recent weeks, finance minister P Chidambaram on Tuesday sought to place the India story aggressively before global investors as he began a four-nation tour aimed at boosting capital inflows.
In Hong Kong, Chidambaram promised more policy action in the days ahead and a relentless focus on fiscal prudence. He also hinted at a revenue strategy entailing an expansion of the tax base rather than a hike in rates and analysts saw this as a sign that Budget 2013 would be devoid of tax hikes.
Keen to avert a sovereign rating downgrade for the country, Chidambaram used the overseas platform to announce that he was aiming to introduce the Bill on goods and services tax (GST), expected to bolster the government’s revenue base, in the monsoon session of Parliament in August and get it passed by December.
On Tuesday, Standard & Poor’s issued an analysis saying a negative outlook for India has a more than 50% chance of getting confirmed.
The minister said he was “very confident” that a rating downgrade won't happen, adding that the new Cabinet Committee on Investments’ first meeting will be held by January end, with key focus on faster approvals for infrastructure projects. The FM projected a 6-7% economic growth for Asia’s third-largest economy this fiscal and 8% for 2014-15 and promised to continue with the economic policy overhaul.
The minister’s visit to Hong Kong, Singapore, London and Frankfurt marks the beginning of New Delhi’s plank of dispatching Cabinet ministers across the world to directly explain to the key figures in global financial centres about the reform measures the country has recently adopted to restore investor confidence. Chidambaram will later visit New York and Dubai. India needs capital inflows to bridge a current account deficit that has swelled to a record $22.31 billion or 5.4% of the GDP in the quarter ended September 30.
Even as Chidambaram told investors in Hong Kong that the General Anti-Avoidance Rules or GAAR that unnerved investors earlier in the year had been efficiently handled