Ruling out early elections, finance minister P Chidambaram on Saturday said the government will move ahead with key financial reforms, expedite stalled projects and finalise a price-pooling for coal in the coming months to help the economy revive faster, even as earlier efforts are yielding results in narrowing the fiscal deficit to less than 5.2% of GDP during 2012-13.
There will be no early elections. It (Lok Sabha election) will take place in May 2014, Chidambaram said. The minister said the government was moving fast with reforms, such as extending the rollout of direct benefit transfers to 78 more districts and transfer of LPG subsidies.
The government will also relook the sectoral caps to increase foreign direct investment flows once the committee headed by economic affairs secretary Arvind Mayaram submits a paper on the subject in two weeks, he said at a press conference, after returning from his roadshows in Tokyo and Dubai to woo foreign investors.
Chidambaram said an amendment to the Income Tax Act with regard to retrospective taxation will be taken up once the dispute with Vodafone is resolved and comments are discussed in the Cabinet. We are trying to tell the industry and investors that India is a safe investment destination, he said, adding that the UPA will soon hold consultation with Opposition parties to persuade them to support the government in passing the insurance and pension bills. The standing committee on finance has already submitted its reports on the insurance and pension bills, and the government has listed their discussion and passage in the ongoing Budget session.
The Insurance Laws (Amendment) Bill proposes hike in FDI limit to 49% from the present 26%, while the Pension Fund Regulatory and Development Authority Bill provides for opening up the sector to foreign players with the FDI cap aligned to that of the insurance sector.
The Cabinet committee on investment, which has had three meetings so far since its inception, will again meet this month to clear 31 stalled projects in the oil and gas sector, he said. In the petroleum sector, investments worth $20 billion for exploration and production activities in 40 oil blocks had been held up for many years due to lack of security clearances. The CCI has also cleared a R14,000-crore power project of NTPC that was stalled for 13 years, along with 12 mining projects that will enhance coal supplies by 37 million tonnes annually.
The power ministry will soon send a report to the coal ministry so that the Cabinet note on coal price pooling can be prepared at the earliest, Chidambaram said.
Reeling out latest tax collection data, the finance minister said the government has met the revised target of R10.38 lakh crore, which was 16.7% higher than the collections during 2011-12. This, along with spending cuts, has helped the government to keep within the revised target. It (the actual fiscal deficit number) will be better than 5.2%. There will be some savings, he said.
Even for current account deficit (CAD), he said the fourth quarter number will be much smaller than the record 6.7% of GDP recorded during October-December. The CAD for entire 2012-13 will be more tolerable, he said, adding, We have to increase our exports and ensure unnecessary imports dont take place. Gold imports were rising because of inflation. We will continue to address that.
On the sting operations by Cobrapost on three leading private banks, he said the Reserve Bank of India was looking at allegations of money laundering by staff in three private banks following the sting operation. The RBI is seriously looking at the matter. If there is any violation of tax laws, stern action will be taken, he said, adding that if the operations are based on false names and no money was involved, then there could be charges from the taxation side.
He added that an inquiry has been initiated against the individuals whose names appeared in a report on the monies stashed in tax heaven. Yes. We have taken note of the names and inquiries have been put in motion in respect of the names that have been exposed, he said. A worldwide media expose has unearthed details of 2.5 lakh individuals and entities from more than 170 countries, including India, who evaded taxes by setting up companies in tax havens.
* Relook at sectoral caps to increase FDI
* IT Act to be amended after dispute with Vodafone resolved
* 31 stalled projects in oil and gas sector to get push
* Coal price pooling to be finalised
* CAD in Q4 to be much smaller than that of Q3FY13
* Rollout of DBTs to 78 more districts, transfer of LPG subsidies
* No early elections