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Will Present A Responsible Budget Next Month: FM
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Finance Minister P Chidambaram held out an assurance that the Budget next month will be a "responsible" one as general elections are 15 months away.
Addressing global investors in London, on the fourth leg of his overseas roadshows that began last week, he told them that the government will implement many of the decisions and changes in the run-up to the polls. He expressed confidence that foreign investment flows into India will improve after these roadshows which have shown that India has enormous goodwill.
The Minister also expressed confidence that government would find a resolution to the Vodafone tax controversy, an issue that figured only peripherally in the investor meeting here.
Chidambaram said during the meeting here investors expressed reservations over political stability and capacity of the government to take reforms forward. They pointed out that elections are due in 2014 and "will we waver or falter in the run-up to the elections".
"I assured them that the polls are 15 months away and that the Budget that will be presented in February will be a responsible Budget, that we will implement many of the decisions and changes in the run-up to the polls," he told reporters after the meeting.
Chidambaram said there is no reason for investors to doubt that "in the run-up to the polls we will be anything but responsible".
The Finance Minister said after the roadshows in the four cities "there is enormous interest in India. There is enormous goodwill for India, that India must get back to the high growth path and they want us to recapture what we achieved between 2004 and 2009. I am very positive and I am very hopeful".
Maintaining that foreign direct investment (FDI) are robust, he said figures till October show that it continue to be good.
"But I think after these road shows in Hong Kong, Singapore, Frankfurt and now in London, I think FDI interest will improve and FDI flows will improve," he said.
Chidambaram said if one went by the number of people attending the conferences and questions they asked, it showed there was enormous interest and goodwill for India.
"I sincerely hope that these roadshows have helped to answer their questions, clarified their doubts and stimulate interest in India," he said.
"They were more concerned about fiscal consolidation, policy to address structural issues and stalled projects and how we are going to remove these roadblocks and get them started," he said.
Chidambaram said while the bulk of the questions was in these areas, on financial sectors it was mainly about taxation on investment, know-your-customer (KYC) norms and related issues.
Among those who attended the conference were NRI industrialists G P Hinduja and S P Hinduja and Caparo CEO Angad Paul.
Later, a note issued by Standard Chartered, a co-host of the Finance Minister's investor meet in London, said Chidambaram emphasised that fiscal consolidation will happen at any cost.
The note said Chidambaram promised action on both revenue and expenditure side.
"On the expenditure side, while subsidies cannot be removed completely, he emphasised they could be better administered by rolling out the direct benefit transfer scheme to the entire country by end-2013," the note said.
On RBI reducing the key rates by 0.25 per cent in its policy review today, the note said the Finance Minister was pleased with the reduction in repo rate.
"Striking the right balance between growth and inflation remains a policy challenge. While high inflation hurts the poor, low growth is equally harmful", Chidambaram said.