Next government will face the same problems we did in Parliament: P. Chidambaram

Mar 24 2014, 09:19 IST
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Here are the edited excerpts from an exit interview with Finance Minister P Chidambaram. Reuters Here are the edited excerpts from an exit interview with Finance Minister P Chidambaram. Reuters
SummaryHere are the edited excerpts from an exit interview with Finance Minister P Chidambaram.

ourselves 2 years and 6 months to pull back the economy to the high growth path.

Will the next government be facing a banking crisis?

There won't be any banking crisis. The big constraint will be resources. Unless we grow at a higher rate, we will not have the revenue resources, both tax and non-tax. That will be the big constraint.

Uday Kotak has said that 30-40% of the net worth of the banking system can be eroded.

I don't comment on the view of experts. I have said earlier that banking is the only business in the world which requires additional capital even if it grows at a normal rate. What we have provided in the budget as government contribution is limited, that is why we are exploring today two or three alternatives to raise fresh capital. We will come up with options to raise more capital. Whether those options include reducing government holding is a political decision. The UPA policy is government holding will not go below 51% and banks will remain public sector banks. The NDA toyed with the idea of 33% but gave up on that.

Will a large number of the projects cleared by the CCI need to be restructured – economic conditions were so different when they were set-up.

I have not heard any banker say that any one of these project promoters, in cases where the CCI has cleared them, has come to them for restructuring. The bankers gave me a list of cases where the draw-down has begun, where disbursements have begun.

Despite the Cabinet clearance, the oil ministry says higher gas prices will only be given to RIL and not to BP or Niko.

The cabinet decision has allowed a price increase. Whether that has to be further granulated, to see whether it applies to A or B, that is a decision of the ministry of petroleum. If they have any doubt they will come back to cabinet and at that time we will look at it.

What are the biggest challenges you faced as finance minister in UPA I and UPA II?

In UPA I the most challenging moment was when the financial collapse took place in September 2008. We had to ensure that the economy was not affected too much, which is what we did.

In UPA II, the most challenging moment was when I found in August 2012 that both the fiscal and the current

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