Stalled projects, divided polity harming economy: Chidambaram

Finance Minister P Chidambaram today told Lok Sabha that stalled projects in the power, coal and iron ore sectors, plus problems in land acquisition, have done little to help the country’s economy at a time when the nation is scrambling for funds.

“We have to find a way to resolve the impasse in the coal and iron ore sectors and in land acquisition. If there are irregularities, they can be enquired. Why block them all? We have to find a way to end this impasse despite our ideological differences,” Chidambaram said in the Lower House while replying to a discussion under Article 193 on the state of economy.

“We must unblock the stalled projects. After the Cabinet Committee of Investments was set up, we cleared many projects,” the finance minister said.

Stating that it is of paramount importance to increase exports to tame the Current Account Deficit, he said, “We must encourage exports. This is the only trajectory to narrow down the CAD.”

The finance minister also expressed disappointed over the burgeoning list of imports.

“Of the top 20 imports, there are many things which we should not have imported. Why are we importing electronic goods that are made by Indian engineers abroad? We must increase production in electronics and textiles. India can be strong only if we become a strong manufacturing economy,” Chidambaram said.

Admitting that the country’s economy is not in its best shape and the growth rate is not very satisfactory, he said. “No finance minister in the world can say all is well. The world has not recovered from the crisis of 2008. India is growing today at 5 percent despite all odds. I am sad about it. India cannot afford to grow below 8 percent.”

Chidambaram said that the crisis is global and it is natural that India gets affected. “There is no comfort in the fact that our peers have also been affected. The BRICS nations are affected. Even a country with CAD surplus like Malaysia has been affected.”

He agreed that the spiraling CAD has become a big headache for the government.

“In the last couple of years, financing the CAD has become a major challenge. However, we are confident that we will contain the CAD below $70 billion this year,” Chidambaram said assuring the House that steps are being implemented to tackle the problem.

In the fiscal deficit front too, the government is struggling to narrow down the widening gap.

“Immediate task is to control the fiscal deficit. If it goes out of control, it is inflationary. We have been able to keep it at 4.8 percent so far,” he said.

The government sounded little comfortable only in the arena of external debt. “External debt is still very much manageable. All options are open to bring it even lower,” Chidambaram said.

Appealing to his colleagues to extend their support in this hour of economic crisis, the finance minister said, “If Parliament is not able to point to the direction where the economy will go, what message will it give to the world? The fact is polity of the country is divided on economic policies.”

Rejecting the opposition charge of imposing a controlled capitalism, Chidambaram said, “My basic instinct is of a reformer. What we need now is not restrictions but more reforms. What we need today is not a closed economy but an open economy.”

Only respite that allowed the government to breathe little easy seems to have come from the skies in the form of good rains.

“We must reap the benefit of a good monsoon. Nothing must be done that would come in the way of maximising farm production. We would do everything possible to maximise farm production. We would expand the sown area,” the finance minister said.

He made it clear that the public sector banks have been instructed not to hold back farm loans. The finance minister also said that the public sector banks are well capitalised and efforts are on to infuse them with more funds.

“Our public sector banks are well capitalised. But we need to invest more for investor confidence. We are going to pump in Rs 14,000 crore this fiscal,” Chidambaram said.