Chidambaram prescribes bitter medicines as Mamata plays forward!
Chidambaram prescribes bitter medicines as Mamata Banerjee expressed confidence that her party would be a key player.
Indian Holocaust My Father`s Life and Time, Chapter: Nine Hundred Thirty Eight
Palash Biswas
Mobile: 919903717833
Skype ID: palash.biswas44
Email: palashbiswaskl@gmail.com
Hinting at some tough measures in the coming days, Finance Minister P Chidambaram on Friday said some “bitter medicine” is necessary to restore the health of the economy and get back to high growth path.Now health conscious Indian citizens must be aware of the impact as the most of the mango people remain unaware and ignorant. Bengal firebrand leader Mamata Banerjee seized in Bengal is all set to play forward with ambition to lead the nation.We may watch closely her venture, but her limitations are so loud, we may not expect any release from Chidambaram`s hospital.
“Some bitter medicine has to be taken this year. We have to take some bitter medicine. There is no other way...this bitter medicine is good medicine. It will restore the health of the economy and next year we can look forward to much higher growth,” he said.
Mr. Chidambaram was winding up a discussion on the first batch of supplementary demands for grants in the Lok Sabha.
Finance Minister P Chidambaram today said the government will take some more steps in the next few weeks to revive the economy and boost investment sentiments. The government's action on pending economic reforms and the Reserve Bank of India's policy review next week are likely to dictate the directions for the India markets.The Reserve Bank is likely to keep policy rates unchanged in its monetary policy review next week, although inflation for the second the second consecutive month in November has declined, experts have said.They also said that a CRR cut of 0.25 per cent is likely. "The decline in core inflation is welcome and will provide some comfort to the RBI, but the November uptick in CPI inflation and the firm HSBC PMI price readings suggest that we are not out of the woods yet," HSBC Chief Economist for India and ASEAN Leif Lybecker Eskesen said in a research note. Reflecting concerns of members, Finance Minister P Chidambaram on Friday said in the Lok Sabha he was not happy with implementation of Air India's turnaround plan, but is injecting Rs2,000 crore to keep the national carrier afloat to check any spurt in fares.
After growing at over nine per cent, the GDP slipped to nine-year low of 6.5 per cent in 2011-12 and during the current year, as per the RBI projection, is estimated to be 5.8 per cent.
The Finance Minister also expressed confidence that inflation, which has continued to remain a concern and a challenge, would moderate in the next two to three months.
“Inflation is a challenge. Inflation worries the government. While CPI inflation is sticky, good news is that WPI inflation seems to be trending downwards...If it trends downwards, there will be some reason for comfort,” he said.
The WPI inflation, which is based on movement in wholesale prices, moderated to 7.24 per cent in November from 7.45 per cent a month ago. The retail inflation, however, was at 9.9 per cent in November, up from 9.75 per cent in October.
Later, amid walk out by BJP and Trinamool Congress, the Lok Sabha passed the first batch of supplementary demands for grants that seek to raise government expenditure by Rs 32,120 crore in 2012-13.
Of the total cash outgo of Rs 30,804 crore, Rs 28,500 would be towards oil subsidy and Rs 2,000 crore for rehabilitating Air India.
Mr. Chidambaram said there have been several setbacks to the turnaround plan of Air India and the government needs to infuse funds to prevent the private air carriers to jack up fares.
“If I do not provide this Rs 2,000 crore (to Air India) there will be greater difficulty ... If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their airlines because so many seats will not be available,” he said.
He said the government is committed to get back to the path of fiscal consolidation and to avoid downgrading by various rating agencies.
“If we do not succeed in fiscal consolidation, there is a risk of rating downgrade to junk status. We cannot afford that,” he said, adding that he sought support of the House to adhere to the fiscal consolidation roadmap.
The government has come out with fiscal consolidation roadmap wherein it plans to restrict deficit at 5.3 per cent of GDP in the current year and bring it down to 3 per cent by the end of the Plan period.
Mr. Chidambaram said there was a need to give Rs 28,500 crore to Oil Marketing Companies (OMCs) as they are not able to recover the cost. The OMCs normally recover the shortfall in three ways -- by way of government subsidy, contribution from upstream oil companies and internal resources.
The petroleum subsidy has risen considerably in the past few years.
“I share concern of consumers,” he said, hoping that OMCs and upstream oil companies will increase their contribution in meeting the under-recoveries.
On growth, Mr. Chidambaram said the economy is facing challenging times with a growth rate of over 5 per cent.
“Economy is challenged. But I am confident that measures we have taken will put the economy back on rail ... I hope, when I present the Budget, I will put a much better picture of economy,” he said.
Visualising a larger role for the Trinamool Congress in government formation after the 2014 general elections, party supremo Mamata Banerjee today expressed confidence that her party would be a key player.
"Bengal will lead India from Delhi," Banerjee told a meet of captains of industry in Kolkata, a party MP who was present quoted her as saying.
"If Bengal is running Bengal today then Bengal can run India tomorrow," Banerjee, the West Bengal Chief Minister told the meet which was offlimits to the media.
Emphasizing the importance of regional parties in national politics, she said "Regional parties understand better regional and national aspirations. They understand the needs of the people."
Banerjee who parted ways with the Congress last September by withdrawing support to the UPA government on FDI in retail said that most national parties "are self-centred like the Congress."
Naming the Congress, but not the BJP, she said "they bulldoze and try to get their way."
On the issue of land raised by the audience, Banerjee asked them to take a look at the new land allotment policy that proposed to auction government land for industry and give the state a more proactive role in the process.
She reiterated that there would be no forcible acquisition of land.
Party MP Derek O'Brian said the chief minister urged industrialists to invest in new areas like education, health, tourism, transport and infrastructure.
"The CM had a candid interaction with the audience on every issue," Derek said.
Among the industrialists present were Vijay Mallya, Kumarmangalam Birla, Karan Paul of Apeejay, Sanjiv Goenka and Harsh Neotia as also Bollywood personalities like Anil Kapoor and Sonam Kapoor.
Months after Trinamool Congress pulled out of the UPA II, Prime Ministeer Manmohan Singh and West Bengal chief minister Mamata Banerjeree are likely to share the stage this week during annual general meeting of Federation of Indian Chambers of Commerce and Industry (Ficci).According to Ficci President R V Kanoria, both have confirmed their presence in the December 15 event in New Delhi. This will be Prime Minister Manmohan Singh's first meeting with the former UPA ally leader since the Trinamool Congress quit the government in September.
West Bengal chief minister is likely to make a three-day visit to the national capital starting December 15. During his visit, Banerjee will also address the state government organised investors' meet at Delhi's new Banga Bhavan on December 17.
After experiencing a meek response in all the earlier government sponsored industry meets in the state, the government has decided to take the event to Delhi this time.
According to state government officials, about 100 industrialists across the country are among the invitee, of which about 60 people have already confirmed their presence.
Bharti Airtel Chairman and Managing Director Sunil Mittal, Hero MotoCorp joint managing director Sunil Kant Munjal, ITC Chairman Y C Deveshwar are some of the leading industrialists who are likely to attend the investors meet.
West Bengal chief minister Mamata Banerjee left Kolkata for Delhi on Friday evening. She will stay in the capital for four days and will be back in Kolkata on December 19. During her stay in the capital, Mamata will meet the industry lobby at the new Banga Bhavan building on December 17. On Saturday, she will attend a function organised by the FICCI.Economic Times reports.
The Prime Minister Manmohan Singh will also attend the FICCI function. Mamata will share a common platform with the Prime Minister at the FICCI's function for the first time after she withdrawn support on the UPA II government. In fact, Mamata has not paid any visit to the capital after she snapped her ties with the Congress by withdrawing support on the UPA II government. Naturally, her four-day visit to the capital bears political significance too.
It is learnt that she will hold talks with some MPs who had voted against the UPA government on the issue of allowing FDI in retail trade. Although Mamata's move to pull down the UPA II government had gone in vain and her party's attempt to prevent the Manmohan Singh government from implementing its decision to allow FDI in retail trade has flopped, the West Bengal chief minister is not leaving the hope for putting the UPA government in further trouble and for this, she will be meeting some key leaders during her stay in the capital.
It is learnt that Mamata will hold a meeting with her party MPs during her four-day trip to Delhi. She had not visited Delhi after she quit the Union government. She also did not meet her MPs in Delhi. Naturally, the chief minister will utilise her recent trip to fulfil both the missions of inviting investment for West Bengal and mobilise support for her crusade against the UPA II government.
Immediately after her return to Kolkata, the chief minister will rush to Tehatta in Nadia district on December 20 to hold a public rally there. Tehatta has become a troubled zone after one person had died in police firing last month.
Mamata had condemned the police firing which claimed one life and will meet the family members of the person who had died in the firing. She will also visit north Bengal for three days from December 26 and will be back in Kolkata on December 29.
"Bengal will lead India from Delhi," Banerjee told a meet of captains of industry here, a party MP who was present quoted her as saying.
"If Bengal is running Bengal today then Bengal can run India tomorrow," Banerjee, the West Bengal Chief Minister told the meet which was offlimits to the media.
Emphasizing the importance of regional parties in national politics, she said "Regional parties understand better regional and national aspirations. They understand the needs of the people."
Banerjee who parted ways with the Congress last September by withdrawing support to the UPA government on FDI in retail said that most national parties "are self-centred like the Congress."
Naming the Congress, but not the BJP, she said "they bulldoze and try to get their way."
On the issue of land raised by the audience, Banerjee asked them to take a look at the new land allotment policy that proposed to auction government land for industry and give the state a more proactive role in the process.
She reiterated that there would be no forcible acquisition of land.
Party MP Derek O'Brian said the chief minister urged industrialists to invest in new areas like education, health, tourism, transport and infrastructure.
"The CM had a candid interaction with the audience on every issue," Derek said.
Among the industrialists present were Vijay Mallya, Kumarmangalam Birla, Karan Paul of Apeejay, Sanjiv Goenka and Harsh Neotia as also Bollywood personalities like Anil Kapoor and Sonam Kapoor.
"As far as AI is concerned there is a turnaround plan. I am not happy with the way the plan has been implemented in the past. There has been several setbacks. But what do we do with AI? If I do not provide this Rs 2,000 crore there will be greater difficulty," he said winding up a discussion on the supplementary demands for grants.
Of the additional expenditure Rs 32,120 crore under the first batch of supplementary, Rs 2,000 crore has been earmarked for equity infusion in Air India as part of the turnaround plan and restructuring package.
"If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their air fares because so many seats will not be available. Which is why we are providing Rs 2,000 crore to AI," Chidambaram said.
The Minister said there were some indications of an uptick in Air India in the last quarter and hoped that AI employees and management will also assist in turning it around.
The national carrier's losses have been mounting from Rs 5,548.26 crore in 2008-09, Rs 5,552.44 crore in 2009-10, Rs 6,865.17 crore in 2010-11 to Rs 7,853 crore in 2011-12.
"There are airlines in the country and around the world running in profit and there is no reason why AI should not be turned around," Chidambaram said.
His response came after members from parties like BJD, Trinamool Congress questioned the government's move to infuse more funds when there was no proper plan for the turnaround of the national carrier.
"I am confident that the steps we have taken, and some more steps that we will take in the next few weeks, will help turn the Indian economy around," he said addressing the 'Delhi Economics Conclave' here.
In the recent past, government has taken a number of measures, including opening up of FDI in multi-brand retail and hiking foreign investment cap in the aviation sector, to boost economic growth and restore investor confidence.
Besides yesterday, the Union Cabinet cleared setting up of Cabinet Committee of Investment to fast-track large project entailing investment of over Rs 1,000 crore.
"It is too early to say whether the measures have begun to bear fruit, although it is our expectation that they will do so," Chidambaram said.
Concerned over sticky retail inflation, the Minister said: "There is no reason at all to become complacent".
While headline inflation has moderated to 7.45 per cent in October, the retail inflation remains high at 9.90 per cent.
The economic growth in the first half of the fiscal fell to 5.4 per cent, against 7.3 per cent in the corresponding period a year ago. The growth in 2011-12 fell to a nine-year low of 6.5 per cent. In the current fiscal RBI expects it to be around 5.8 per cent.
Stressing that the present challenge is different from the one faced in 2008, Chidambaram said: "The present challenge calls for bold and innovative measures". While in 2008-09 imports had reduced considerably due to fall in international crude oil prices, the situation at present is different as, while exports are declining, imports continue to remain high mainly on account of crude and gold.
He said with rapid globalisation of economy, external sector is becoming more vulnerable.
The Finance Minister also asked Asian G20 member nations and Russia to increase resource base of Asian Development Bank for development of the region.
On the other hand,Rahul Gandhi on Friday signalled that the cash transfer scheme beginning from the New Year could be the Congress trump card in the 2014 Lok Sabha elections like the farmers loan waiver and NREGA earlier.
"Rahul Gandhi said that your money in your hands is definitely a political slogan. We are fully confident that we will move forward with it before 2014," Union Minister Jairam Ramesh told reporters at a specially convened briefing here in AICC.
Ramesh also quoted Gandhi as saying that "your money in your hand is an effective instrument of Congress and the government to fight against corruption."
He was addressing the press hours after Gandhi conducted a closed-door special training session for 51 district Congress Presidents and Youth Congress Presidents on the scheme titled as Direct Benefit Transfer (DBT) system. It has been hailed by Finance Minister P Chidambaram as a "game changer".
The scheme is being started in the districts on a pilot basis. Ramesh was one of Union Ministers along Chidambaram, who today addressed the district Congress leaders in Rahul's presence.
Party general secretary Janardan Dwivedi, who shared the dais with Ramesh at AICC, however, had a different take, saying while there will be people who could dub it a "political slogan, but "for us it is a scheme for the welfare of the people".
Ramesh also quoted Rahul as saying that Information Technology will have an important role in the fight against corruption and that the DBT system is "not just a scheme but a fundamental transformation of the delivery system".
Rahul also recalled the famous statement by his father and former Prime Minister Rajiv Gandhi about that only 15 per cent money of the schemes meant for the beneficiaries reach them while the rest land in the hands of middlemen, he said. "If we are successful in this system (DBT), 100 out of 100 rupees meant for the beneficiaries will reach them."
Noting that there was a PCO revolution in the country before the mobile revolution came, Rahul said that the DBT scheme will also be the beginning of a change in the nation's delivery system in the same mannner in which PCOs led the foundation for the telecom revolution.
Ramesh said there was "no plan right now to bring Public Distribution System" under the ambit of DBT. "Food subsidy is not on the agenda of the government for this," he said.
The Minister said that LPG, kerosene and fertilizer subsidies will be taken up under it but this process will take at least one year. Right now the DBT system will be applicable in payment of scholarships, MNREGA wages, pension and other welfare schemes, he said.
In the meeting, Rahul addressed leaders of the 51 district where the scheme will be launched from January 1, asking them to put in their best efforts and ensure its success.
He also told them how the scheme will directly benefit people concerned by eliminating middlemen and shortening the process of cash subsidies.
Rahul also said that he intends to visit a maximum of these 51 districts.
He said that 94 crore people in India have mobile phones, adding, "The most democratic instrument in the country is mobile phone. The opening of the delivery system will benefit in the same manner as the advent of mobile has led to a democratisation"
A total of 170 people attended the two-and-a-half hour long meeting in which Rahul and Chidambaram stayed for over two hours. "It has been our efforts that when important decisions are made, there should be coordination between the party and the government," Ramesh said.
He said that this is done everytime when flagship progammes are executed and recalled that it was done even when MNREGA was implemented.
Talking separately, AICC leader Shakeel Ahmed said that Rahul told the district Congress leaders that this scheme will ensure that money reaches the beneficiaries directly.
Reflecting concerns of members, Finance Minister P Chidambaram on Friday said in the Lok Sabha he was not happy with implementation of Air India's turnaround plan, but is injecting Rs2,000 crore to keep the national carrier afloat to check any spurt in fares.
"As far as AI is concerned there is a turnaround plan. I am not happy with the way the plan has been implemented in the past. There has been several setbacks. But what do we do with AI? If I do not provide this Rs 2,000 crore there will be greater difficulty," he said winding up a discussion on the supplementary demands for grants.
Of the additional expenditure Rs 32,120 crore under the first batch of supplementary, Rs 2,000 crore has been earmarked for equity infusion in Air India as part of the turnaround plan and restructuring package.
"If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their air fares because so many seats will not be available. Which is why we are providing Rs 2,000 crore to AI," Chidambaram said.
The Minister said there were some indications of an uptick in Air India in the last quarter and hoped that AI employees and management will also assist in turning it around.
The national carrier's losses have been mounting from Rs 5,548.26 crore in 2008-09, Rs 5,552.44 crore in 2009-10, Rs 6,865.17 crore in 2010-11 to Rs 7,853 crore in 2011-12.
"There are airlines in the country and around the world running in profit and there is no reason why AI should not be turned around," Chidambaram said.
His response came after members from parties like BJD, Trinamool Congress questioned the government's move to infuse more funds when there was no proper plan for the turnaround of the national carrier.
The markets are likely to move in a range ahead of the RBI's rate review on Tuesday. Most analysts expect the central bankBSE 1.07 % to leave interest rates on hold and say that the RBI could instead cut the cash reserve ratio.
An unexpected jump in industrial output and lower-than-expected inflation numbers have reinforced hopes that the RBI could start cutting interest rates in January. Further traction on reforms is also anticipated as the winter session of Parliament is due to end on December 20.
A PTI report quoting RBI Deputy Governor K C Chakrabarty said the Reserve Bank expects inflation to moderate further in the next 2-3 months, that may lead it to cut interest rates.
According to a recent poll by Reuters, the Reserve Bank of India is expected to keep interest rates unchanged on Tuesday, with respondents split over whether it will cut the cash reserve ratio ( CRR) for banks. However, expectations are near-unanimous for an interest rate cut in the March quarter.
The government has already approved a slew of fiscal and economic reforms, but bills are pending on banking, pension and insurance.
Key factors/Events to watch:
On Saturday, Prime Minister will attend an industry event in New Delhi.
On Tuesday, RBI will review the monetary policy. Then, Parliament's winter session will end on Thursday and India hosts ASEAN summit.
On Friday, weekly forex reserves, bank loan data will be out.
Wholesale price based inflation eased to 7.2 per cent in November as against 7.5 per cent in October on account of a decline in fuel and core inflation.
According to HSBC, the RBI will keep the policy rate on hold next week, although it is likely to cut the CRR by 0.25 per cent to address the lingering liquidity tightness.
Barclays Capital Economist Siddhartha Sanyal said in a research note: "As regards the widely expected rate cuts, the RBI seems to prefer to lag rather than undertake any easing, in anticipation of easing inflation pressures."
"We continue to expect the RBI to reduce the cash reserve ratio (CRR) on December 18 by another token 25 bp," he said.
"Headline inflation eased unexpectedly led by fuel and core inflation, which should provide the RBI with some comfort. However, this will not be enough to trigger a rate cut next week, although RBI is likely to cut the CRR again and signal the potential for rate cuts early next year," HSBC said.
Over the past three months, the Reserve Bank has reduced the cash reserve ratio, the portion of deposits banks are required to keep with RBI, by 0.50 per cent to 8 per cent. But these cuts did not lead to an easing of overnight rates.
The RBI is scheduled to announce its mid-quarter monetary policy review on December 18.
Reserve Bank has resisted a widespread call for the growth-propping rate cuts for some time now, citing the elevated inflation.
Meanwhile, World Bank chief economist Kaushik Basu on Friday urged India to keep up its blitz of "promising" reforms, saying they can help the economy return to the nine percent growth needed to combat poverty.
The World Bank expects growth of Asia's third-largest economy to be 5.5 percent this calendar year, inching up to just short of six percent next year and reaching close to seven percent the following year, Basu said.
If the country stays on its "promising" reform path, he added, "it has enough fundamental strength there is no reason why India can't get back to the eight to nine percent growth" which it enjoyed in the second half of the last decade.
"If we can continue to push on reforms we can make a big difference to India," Basu, previously chief economic adviser to the Indian prime minister, told an economic forum in New Delhi.
Basu's remarks came as Finance Minister P. Chidambaram promised more steps to spur the economy, which has slowed sharply due to high interest rates and the global downturn, on top of a spurt of reform measures recently announced.
Late Thursday, the cabinet cleared changes to a century-old land acquisition law and established a panel to be headed by Premier Manmohan Singh to fast-track projects to overhaul India's dilapidated ports, roads and other infrastructure.
The draft land purchase law -- which must now be approved by parliament -- seeks to give farmers higher prices for their land and lays down that companies buying property must win assent from 80 percent of landholders.
In public-private projects, 70 percent must approve the sale.
Compulsory land seizures in the past have sparked bitter clashes between farmers and state authorities and huge project delays as India industrialises in its quest to create more jobs for its youthful 1.2-billion population.
The new steps come after the government won a parliamentary vote last week approving its decision to let in foreign supermarkets -- a key plank of its renewed economic reform agenda.
Singh's scandal-tainted government has initiated a string of reforms that aim to open up sectors such as retail, insurance and aviation to foreign investors as it seeks to kickstart growth before it is slated to face voters in 2014.
Indian Holocaust My Father`s Life and Time, Chapter: Nine Hundred Thirty Eight
Palash Biswas
Mobile: 919903717833
Skype ID: palash.biswas44
Email: palashbiswaskl@gmail.com
Hinting at some tough measures in the coming days, Finance Minister P Chidambaram on Friday said some “bitter medicine” is necessary to restore the health of the economy and get back to high growth path.Now health conscious Indian citizens must be aware of the impact as the most of the mango people remain unaware and ignorant. Bengal firebrand leader Mamata Banerjee seized in Bengal is all set to play forward with ambition to lead the nation.We may watch closely her venture, but her limitations are so loud, we may not expect any release from Chidambaram`s hospital.
“Some bitter medicine has to be taken this year. We have to take some bitter medicine. There is no other way...this bitter medicine is good medicine. It will restore the health of the economy and next year we can look forward to much higher growth,” he said.
Mr. Chidambaram was winding up a discussion on the first batch of supplementary demands for grants in the Lok Sabha.
Finance Minister P Chidambaram today said the government will take some more steps in the next few weeks to revive the economy and boost investment sentiments. The government's action on pending economic reforms and the Reserve Bank of India's policy review next week are likely to dictate the directions for the India markets.The Reserve Bank is likely to keep policy rates unchanged in its monetary policy review next week, although inflation for the second the second consecutive month in November has declined, experts have said.They also said that a CRR cut of 0.25 per cent is likely. "The decline in core inflation is welcome and will provide some comfort to the RBI, but the November uptick in CPI inflation and the firm HSBC PMI price readings suggest that we are not out of the woods yet," HSBC Chief Economist for India and ASEAN Leif Lybecker Eskesen said in a research note. Reflecting concerns of members, Finance Minister P Chidambaram on Friday said in the Lok Sabha he was not happy with implementation of Air India's turnaround plan, but is injecting Rs2,000 crore to keep the national carrier afloat to check any spurt in fares.
After growing at over nine per cent, the GDP slipped to nine-year low of 6.5 per cent in 2011-12 and during the current year, as per the RBI projection, is estimated to be 5.8 per cent.
The Finance Minister also expressed confidence that inflation, which has continued to remain a concern and a challenge, would moderate in the next two to three months.
“Inflation is a challenge. Inflation worries the government. While CPI inflation is sticky, good news is that WPI inflation seems to be trending downwards...If it trends downwards, there will be some reason for comfort,” he said.
The WPI inflation, which is based on movement in wholesale prices, moderated to 7.24 per cent in November from 7.45 per cent a month ago. The retail inflation, however, was at 9.9 per cent in November, up from 9.75 per cent in October.
Later, amid walk out by BJP and Trinamool Congress, the Lok Sabha passed the first batch of supplementary demands for grants that seek to raise government expenditure by Rs 32,120 crore in 2012-13.
Of the total cash outgo of Rs 30,804 crore, Rs 28,500 would be towards oil subsidy and Rs 2,000 crore for rehabilitating Air India.
Mr. Chidambaram said there have been several setbacks to the turnaround plan of Air India and the government needs to infuse funds to prevent the private air carriers to jack up fares.
“If I do not provide this Rs 2,000 crore (to Air India) there will be greater difficulty ... If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their airlines because so many seats will not be available,” he said.
He said the government is committed to get back to the path of fiscal consolidation and to avoid downgrading by various rating agencies.
“If we do not succeed in fiscal consolidation, there is a risk of rating downgrade to junk status. We cannot afford that,” he said, adding that he sought support of the House to adhere to the fiscal consolidation roadmap.
The government has come out with fiscal consolidation roadmap wherein it plans to restrict deficit at 5.3 per cent of GDP in the current year and bring it down to 3 per cent by the end of the Plan period.
Mr. Chidambaram said there was a need to give Rs 28,500 crore to Oil Marketing Companies (OMCs) as they are not able to recover the cost. The OMCs normally recover the shortfall in three ways -- by way of government subsidy, contribution from upstream oil companies and internal resources.
The petroleum subsidy has risen considerably in the past few years.
“I share concern of consumers,” he said, hoping that OMCs and upstream oil companies will increase their contribution in meeting the under-recoveries.
On growth, Mr. Chidambaram said the economy is facing challenging times with a growth rate of over 5 per cent.
“Economy is challenged. But I am confident that measures we have taken will put the economy back on rail ... I hope, when I present the Budget, I will put a much better picture of economy,” he said.
Visualising a larger role for the Trinamool Congress in government formation after the 2014 general elections, party supremo Mamata Banerjee today expressed confidence that her party would be a key player.
"Bengal will lead India from Delhi," Banerjee told a meet of captains of industry in Kolkata, a party MP who was present quoted her as saying.
"If Bengal is running Bengal today then Bengal can run India tomorrow," Banerjee, the West Bengal Chief Minister told the meet which was offlimits to the media.
Emphasizing the importance of regional parties in national politics, she said "Regional parties understand better regional and national aspirations. They understand the needs of the people."
Banerjee who parted ways with the Congress last September by withdrawing support to the UPA government on FDI in retail said that most national parties "are self-centred like the Congress."
Naming the Congress, but not the BJP, she said "they bulldoze and try to get their way."
On the issue of land raised by the audience, Banerjee asked them to take a look at the new land allotment policy that proposed to auction government land for industry and give the state a more proactive role in the process.
She reiterated that there would be no forcible acquisition of land.
Party MP Derek O'Brian said the chief minister urged industrialists to invest in new areas like education, health, tourism, transport and infrastructure.
"The CM had a candid interaction with the audience on every issue," Derek said.
Among the industrialists present were Vijay Mallya, Kumarmangalam Birla, Karan Paul of Apeejay, Sanjiv Goenka and Harsh Neotia as also Bollywood personalities like Anil Kapoor and Sonam Kapoor.
Months after Trinamool Congress pulled out of the UPA II, Prime Ministeer Manmohan Singh and West Bengal chief minister Mamata Banerjeree are likely to share the stage this week during annual general meeting of Federation of Indian Chambers of Commerce and Industry (Ficci).According to Ficci President R V Kanoria, both have confirmed their presence in the December 15 event in New Delhi. This will be Prime Minister Manmohan Singh's first meeting with the former UPA ally leader since the Trinamool Congress quit the government in September.
West Bengal chief minister is likely to make a three-day visit to the national capital starting December 15. During his visit, Banerjee will also address the state government organised investors' meet at Delhi's new Banga Bhavan on December 17.
After experiencing a meek response in all the earlier government sponsored industry meets in the state, the government has decided to take the event to Delhi this time.
According to state government officials, about 100 industrialists across the country are among the invitee, of which about 60 people have already confirmed their presence.
Bharti Airtel Chairman and Managing Director Sunil Mittal, Hero MotoCorp joint managing director Sunil Kant Munjal, ITC Chairman Y C Deveshwar are some of the leading industrialists who are likely to attend the investors meet.
West Bengal chief minister Mamata Banerjee left Kolkata for Delhi on Friday evening. She will stay in the capital for four days and will be back in Kolkata on December 19. During her stay in the capital, Mamata will meet the industry lobby at the new Banga Bhavan building on December 17. On Saturday, she will attend a function organised by the FICCI.Economic Times reports.
The Prime Minister Manmohan Singh will also attend the FICCI function. Mamata will share a common platform with the Prime Minister at the FICCI's function for the first time after she withdrawn support on the UPA II government. In fact, Mamata has not paid any visit to the capital after she snapped her ties with the Congress by withdrawing support on the UPA II government. Naturally, her four-day visit to the capital bears political significance too.
It is learnt that she will hold talks with some MPs who had voted against the UPA government on the issue of allowing FDI in retail trade. Although Mamata's move to pull down the UPA II government had gone in vain and her party's attempt to prevent the Manmohan Singh government from implementing its decision to allow FDI in retail trade has flopped, the West Bengal chief minister is not leaving the hope for putting the UPA government in further trouble and for this, she will be meeting some key leaders during her stay in the capital.
It is learnt that Mamata will hold a meeting with her party MPs during her four-day trip to Delhi. She had not visited Delhi after she quit the Union government. She also did not meet her MPs in Delhi. Naturally, the chief minister will utilise her recent trip to fulfil both the missions of inviting investment for West Bengal and mobilise support for her crusade against the UPA II government.
Immediately after her return to Kolkata, the chief minister will rush to Tehatta in Nadia district on December 20 to hold a public rally there. Tehatta has become a troubled zone after one person had died in police firing last month.
Mamata had condemned the police firing which claimed one life and will meet the family members of the person who had died in the firing. She will also visit north Bengal for three days from December 26 and will be back in Kolkata on December 29.
"Bengal will lead India from Delhi," Banerjee told a meet of captains of industry here, a party MP who was present quoted her as saying.
"If Bengal is running Bengal today then Bengal can run India tomorrow," Banerjee, the West Bengal Chief Minister told the meet which was offlimits to the media.
Emphasizing the importance of regional parties in national politics, she said "Regional parties understand better regional and national aspirations. They understand the needs of the people."
Banerjee who parted ways with the Congress last September by withdrawing support to the UPA government on FDI in retail said that most national parties "are self-centred like the Congress."
Naming the Congress, but not the BJP, she said "they bulldoze and try to get their way."
On the issue of land raised by the audience, Banerjee asked them to take a look at the new land allotment policy that proposed to auction government land for industry and give the state a more proactive role in the process.
She reiterated that there would be no forcible acquisition of land.
Party MP Derek O'Brian said the chief minister urged industrialists to invest in new areas like education, health, tourism, transport and infrastructure.
"The CM had a candid interaction with the audience on every issue," Derek said.
Among the industrialists present were Vijay Mallya, Kumarmangalam Birla, Karan Paul of Apeejay, Sanjiv Goenka and Harsh Neotia as also Bollywood personalities like Anil Kapoor and Sonam Kapoor.
"As far as AI is concerned there is a turnaround plan. I am not happy with the way the plan has been implemented in the past. There has been several setbacks. But what do we do with AI? If I do not provide this Rs 2,000 crore there will be greater difficulty," he said winding up a discussion on the supplementary demands for grants.
Of the additional expenditure Rs 32,120 crore under the first batch of supplementary, Rs 2,000 crore has been earmarked for equity infusion in Air India as part of the turnaround plan and restructuring package.
"If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their air fares because so many seats will not be available. Which is why we are providing Rs 2,000 crore to AI," Chidambaram said.
The Minister said there were some indications of an uptick in Air India in the last quarter and hoped that AI employees and management will also assist in turning it around.
The national carrier's losses have been mounting from Rs 5,548.26 crore in 2008-09, Rs 5,552.44 crore in 2009-10, Rs 6,865.17 crore in 2010-11 to Rs 7,853 crore in 2011-12.
"There are airlines in the country and around the world running in profit and there is no reason why AI should not be turned around," Chidambaram said.
His response came after members from parties like BJD, Trinamool Congress questioned the government's move to infuse more funds when there was no proper plan for the turnaround of the national carrier.
"I am confident that the steps we have taken, and some more steps that we will take in the next few weeks, will help turn the Indian economy around," he said addressing the 'Delhi Economics Conclave' here.
In the recent past, government has taken a number of measures, including opening up of FDI in multi-brand retail and hiking foreign investment cap in the aviation sector, to boost economic growth and restore investor confidence.
Besides yesterday, the Union Cabinet cleared setting up of Cabinet Committee of Investment to fast-track large project entailing investment of over Rs 1,000 crore.
"It is too early to say whether the measures have begun to bear fruit, although it is our expectation that they will do so," Chidambaram said.
Concerned over sticky retail inflation, the Minister said: "There is no reason at all to become complacent".
While headline inflation has moderated to 7.45 per cent in October, the retail inflation remains high at 9.90 per cent.
The economic growth in the first half of the fiscal fell to 5.4 per cent, against 7.3 per cent in the corresponding period a year ago. The growth in 2011-12 fell to a nine-year low of 6.5 per cent. In the current fiscal RBI expects it to be around 5.8 per cent.
Stressing that the present challenge is different from the one faced in 2008, Chidambaram said: "The present challenge calls for bold and innovative measures". While in 2008-09 imports had reduced considerably due to fall in international crude oil prices, the situation at present is different as, while exports are declining, imports continue to remain high mainly on account of crude and gold.
He said with rapid globalisation of economy, external sector is becoming more vulnerable.
The Finance Minister also asked Asian G20 member nations and Russia to increase resource base of Asian Development Bank for development of the region.
On the other hand,Rahul Gandhi on Friday signalled that the cash transfer scheme beginning from the New Year could be the Congress trump card in the 2014 Lok Sabha elections like the farmers loan waiver and NREGA earlier.
"Rahul Gandhi said that your money in your hands is definitely a political slogan. We are fully confident that we will move forward with it before 2014," Union Minister Jairam Ramesh told reporters at a specially convened briefing here in AICC.
Ramesh also quoted Gandhi as saying that "your money in your hand is an effective instrument of Congress and the government to fight against corruption."
He was addressing the press hours after Gandhi conducted a closed-door special training session for 51 district Congress Presidents and Youth Congress Presidents on the scheme titled as Direct Benefit Transfer (DBT) system. It has been hailed by Finance Minister P Chidambaram as a "game changer".
The scheme is being started in the districts on a pilot basis. Ramesh was one of Union Ministers along Chidambaram, who today addressed the district Congress leaders in Rahul's presence.
Party general secretary Janardan Dwivedi, who shared the dais with Ramesh at AICC, however, had a different take, saying while there will be people who could dub it a "political slogan, but "for us it is a scheme for the welfare of the people".
Ramesh also quoted Rahul as saying that Information Technology will have an important role in the fight against corruption and that the DBT system is "not just a scheme but a fundamental transformation of the delivery system".
Rahul also recalled the famous statement by his father and former Prime Minister Rajiv Gandhi about that only 15 per cent money of the schemes meant for the beneficiaries reach them while the rest land in the hands of middlemen, he said. "If we are successful in this system (DBT), 100 out of 100 rupees meant for the beneficiaries will reach them."
Noting that there was a PCO revolution in the country before the mobile revolution came, Rahul said that the DBT scheme will also be the beginning of a change in the nation's delivery system in the same mannner in which PCOs led the foundation for the telecom revolution.
Ramesh said there was "no plan right now to bring Public Distribution System" under the ambit of DBT. "Food subsidy is not on the agenda of the government for this," he said.
The Minister said that LPG, kerosene and fertilizer subsidies will be taken up under it but this process will take at least one year. Right now the DBT system will be applicable in payment of scholarships, MNREGA wages, pension and other welfare schemes, he said.
In the meeting, Rahul addressed leaders of the 51 district where the scheme will be launched from January 1, asking them to put in their best efforts and ensure its success.
He also told them how the scheme will directly benefit people concerned by eliminating middlemen and shortening the process of cash subsidies.
Rahul also said that he intends to visit a maximum of these 51 districts.
He said that 94 crore people in India have mobile phones, adding, "The most democratic instrument in the country is mobile phone. The opening of the delivery system will benefit in the same manner as the advent of mobile has led to a democratisation"
A total of 170 people attended the two-and-a-half hour long meeting in which Rahul and Chidambaram stayed for over two hours. "It has been our efforts that when important decisions are made, there should be coordination between the party and the government," Ramesh said.
He said that this is done everytime when flagship progammes are executed and recalled that it was done even when MNREGA was implemented.
Talking separately, AICC leader Shakeel Ahmed said that Rahul told the district Congress leaders that this scheme will ensure that money reaches the beneficiaries directly.
Reflecting concerns of members, Finance Minister P Chidambaram on Friday said in the Lok Sabha he was not happy with implementation of Air India's turnaround plan, but is injecting Rs2,000 crore to keep the national carrier afloat to check any spurt in fares.
"As far as AI is concerned there is a turnaround plan. I am not happy with the way the plan has been implemented in the past. There has been several setbacks. But what do we do with AI? If I do not provide this Rs 2,000 crore there will be greater difficulty," he said winding up a discussion on the supplementary demands for grants.
Of the additional expenditure Rs 32,120 crore under the first batch of supplementary, Rs 2,000 crore has been earmarked for equity infusion in Air India as part of the turnaround plan and restructuring package.
"If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their air fares because so many seats will not be available. Which is why we are providing Rs 2,000 crore to AI," Chidambaram said.
The Minister said there were some indications of an uptick in Air India in the last quarter and hoped that AI employees and management will also assist in turning it around.
The national carrier's losses have been mounting from Rs 5,548.26 crore in 2008-09, Rs 5,552.44 crore in 2009-10, Rs 6,865.17 crore in 2010-11 to Rs 7,853 crore in 2011-12.
"There are airlines in the country and around the world running in profit and there is no reason why AI should not be turned around," Chidambaram said.
His response came after members from parties like BJD, Trinamool Congress questioned the government's move to infuse more funds when there was no proper plan for the turnaround of the national carrier.
The markets are likely to move in a range ahead of the RBI's rate review on Tuesday. Most analysts expect the central bankBSE 1.07 % to leave interest rates on hold and say that the RBI could instead cut the cash reserve ratio.
An unexpected jump in industrial output and lower-than-expected inflation numbers have reinforced hopes that the RBI could start cutting interest rates in January. Further traction on reforms is also anticipated as the winter session of Parliament is due to end on December 20.
A PTI report quoting RBI Deputy Governor K C Chakrabarty said the Reserve Bank expects inflation to moderate further in the next 2-3 months, that may lead it to cut interest rates.
According to a recent poll by Reuters, the Reserve Bank of India is expected to keep interest rates unchanged on Tuesday, with respondents split over whether it will cut the cash reserve ratio ( CRR) for banks. However, expectations are near-unanimous for an interest rate cut in the March quarter.
The government has already approved a slew of fiscal and economic reforms, but bills are pending on banking, pension and insurance.
Key factors/Events to watch:
On Saturday, Prime Minister will attend an industry event in New Delhi.
On Tuesday, RBI will review the monetary policy. Then, Parliament's winter session will end on Thursday and India hosts ASEAN summit.
On Friday, weekly forex reserves, bank loan data will be out.
Wholesale price based inflation eased to 7.2 per cent in November as against 7.5 per cent in October on account of a decline in fuel and core inflation.
According to HSBC, the RBI will keep the policy rate on hold next week, although it is likely to cut the CRR by 0.25 per cent to address the lingering liquidity tightness.
Barclays Capital Economist Siddhartha Sanyal said in a research note: "As regards the widely expected rate cuts, the RBI seems to prefer to lag rather than undertake any easing, in anticipation of easing inflation pressures."
"We continue to expect the RBI to reduce the cash reserve ratio (CRR) on December 18 by another token 25 bp," he said.
"Headline inflation eased unexpectedly led by fuel and core inflation, which should provide the RBI with some comfort. However, this will not be enough to trigger a rate cut next week, although RBI is likely to cut the CRR again and signal the potential for rate cuts early next year," HSBC said.
Over the past three months, the Reserve Bank has reduced the cash reserve ratio, the portion of deposits banks are required to keep with RBI, by 0.50 per cent to 8 per cent. But these cuts did not lead to an easing of overnight rates.
The RBI is scheduled to announce its mid-quarter monetary policy review on December 18.
Reserve Bank has resisted a widespread call for the growth-propping rate cuts for some time now, citing the elevated inflation.
Meanwhile, World Bank chief economist Kaushik Basu on Friday urged India to keep up its blitz of "promising" reforms, saying they can help the economy return to the nine percent growth needed to combat poverty.
The World Bank expects growth of Asia's third-largest economy to be 5.5 percent this calendar year, inching up to just short of six percent next year and reaching close to seven percent the following year, Basu said.
If the country stays on its "promising" reform path, he added, "it has enough fundamental strength there is no reason why India can't get back to the eight to nine percent growth" which it enjoyed in the second half of the last decade.
"If we can continue to push on reforms we can make a big difference to India," Basu, previously chief economic adviser to the Indian prime minister, told an economic forum in New Delhi.
Basu's remarks came as Finance Minister P. Chidambaram promised more steps to spur the economy, which has slowed sharply due to high interest rates and the global downturn, on top of a spurt of reform measures recently announced.
Late Thursday, the cabinet cleared changes to a century-old land acquisition law and established a panel to be headed by Premier Manmohan Singh to fast-track projects to overhaul India's dilapidated ports, roads and other infrastructure.
The draft land purchase law -- which must now be approved by parliament -- seeks to give farmers higher prices for their land and lays down that companies buying property must win assent from 80 percent of landholders.
In public-private projects, 70 percent must approve the sale.
Compulsory land seizures in the past have sparked bitter clashes between farmers and state authorities and huge project delays as India industrialises in its quest to create more jobs for its youthful 1.2-billion population.
The new steps come after the government won a parliamentary vote last week approving its decision to let in foreign supermarkets -- a key plank of its renewed economic reform agenda.
Singh's scandal-tainted government has initiated a string of reforms that aim to open up sectors such as retail, insurance and aviation to foreign investors as it seeks to kickstart growth before it is slated to face voters in 2014.
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