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PM Modi The Most Dominant Figure Post Poll, Says Chidambaram

Former Finance Minister P Chidambaram has said PM Narendra Modi has emerged as the "most dominant political figure" after the assembly polls, while seeking to differ that the election results are a referendum on note ban

Photo Credit : Reuters


Former Finance Minister P Chidambaram has said PM Narendra Modi has emerged as the "most dominant political figure" after the assembly polls, while seeking to differ that the election results are a referendum on note ban.

The results will increase the BJP's tally in the Upper House and a majority there will make it possible for the NDA government to start radical reforms during its remaining term to accelerate the economic growth, the Congress leader said.

"The elections today have clearly established that the most dominant political figure in India is Prime Minister Modi. And he has a pan-India appeal," Chidambaram told a gathering at Indian Merchants Chamber here.

Stating that the BJP tally in Rajya Sabha will increase, he said the government will enjoy a majority in both houses which will enable it to "pass virtually any Bill" as the political obstacles go off.

This climate will help accelerate the GDP growth to 8 per cent, which is a prerequisite to make India a prosperous and rich society, he said adding the current 7 per cent expansion does not help create new jobs.

"The political conditions are present for that today, but I don't know whether they have identified the other things which have to be done to make that happen," he said.

The former finance minister stressed that for the real reform, the conditions like stopping gratuitous intervention in markets by the government, reconstructing bureaucracy and creating an ethical and equitable society are also necessary.

"In remaining 24-27 months (of the government), given the political conditions at present, we can identify and accelerate the new reforms that will take us back to the 8 per cent growth. I think these obstacles are removable," he said, claiming that the UPA regimes too had introduced reforms despite the lack of numbers between 1991-96 and 2004-14.

On demonetisation, to which he has been very critical, Chidambaram said it would be a "simplistic conclusion" to attribute the note ban to the runaway BJP win in UP.

A variety of other factors were at play during the polls and it was not a "referendum" on the surprise move to ban the high value notes, he said.

Chidambaram also dismissed the talks that all caste equations have vanished.

"I don't think the caste equations have been obliterated forever," he said adding the single-leader mandates in 1971, 1980 and 1984 too had led to the similar talks.

"What happened in UP was that one leader seemed to have complete sway over the electorate (and) seemingly swept away all the divisions," added the Congress leader.

Chidambaram also said the small businesses have suffered a big blow due to demonetisation with "units across clusters" in the country are shutting down as a result of it.

SME credit growth slipping down to a negative 5.3 per cent is indicative of the stress in the sector which produces maximum employment, he said.

He said in his assessment the Goods and Services Tax, the most radical tax reform in the country's history, can only be introduced from October 1.

He said a lot of steps, including the bureaucracy's training, testing and proving the GST network and making the industry and trade understand the new framework are yet to be completed for the purpose.

Chidambaram, however, rued that not sufficient work has happened on other major reform proposals including the Direct Tax Code and implementing the proposals of the Financial Sector Legislative Reforms Commission (FSLRC).

Chidambaram said the DTC is on the "back-burner" while only limited work has happened on the FSLRC suggestions on a "crawling pace," and added that the deconstruction of bureaucracy too is a must.

To remove the stark inequalities from the society, Chidambaram said the minimum wages will have to be increased and universal basic income will have to be eventually introduced.

Equity also needs to be taken care of in a "hopelessly fractured society" like ours, he said.

The former finance minister said the country's income tax base can at best be pulled up to 10 per cent from the present 3 per cent, pointing out that incomes of over Rs 2.5 lakh is taxable as against present per capita income of Rs 1 lakh.

However, ending tax evasion can help bolster the taxation revenues, he said.

Even as an increasing number of countries have started looking inward, Chidambaram said we should not worry and never resort to the protectionist policies and called it a "bane" which restricted our progress for the first 40 years after the independence.

The US will also continue to moderate its stance on protectionism as the time passes, he said.

Chidambaram also supported the idea of bank recapitalisation, saying the lenders cannot deliver credit for the benefit of the economy otherwise.