Davos: Assuring global investors that India is prepared to face the impact of U.S. Fed tapering, Union Finance Minister P Chidambaram on Wednesday said the country is poised to clock 5 per cent growth in the current fiscal and over 6 per cent a year after.
The Indian economy, he said while addressing the World Economic Forum (WEF) meeting in Davos, has “stabilised and it is poised to return to high growth path and step by step we will go back to 8 per cent growth rate“.
In the current financial year, Mr. Chidambaram said the country would see a growth of about 5 per cent, “but next fiscal we will cross 6 per cent“.
India’s growth rate slipped to a decade-low of 5 per cent in 2012-13 fiscal.
Talking about the impact of calibrated tapering of bond purchases by the U.S. Federal Reserve, Mr. Chidambaram said: “We have done a lot of preparatory work. There will be some consequences on emerging economies but I think we are better prepared now to face the taper“.
The Federal Reserve has announced trimming of its $85 billion monthly stimulus after U.S. economic indicators improved.
“Fiscal consolidation has taken place, there’s more FDI flowing into India. We’ve added to our reserves, the rupee is stable and a number of other measures have been taken to bring stability into the capital market,” he said.
Chidambaram hits out at BJP, Modi
As India prepares for elections, Finance Minister P. Chidambaram on Wednesday hit out at BJP terming its economic policies as retrograde and “blood-eyed” and asked why the Opposition Party’s prime ministerial candidate Narendra Modi never fielded a Muslim candidate.
He also expressed confidence that Rahul Gandhi would be Prime Minister if Congress comes back to power, saying the young leader as enough “fire in his belly” for the post, although it was unlikely that any party would get majority and polls were likely to throw a “very fractured mandate”.
Speaking at the World Economic Forum (WEF) Annual Meeting in Davos, Mr. Chidambaram also took dig at Aam Aadmi Party, saying there was no place for mob-democracy in India and the country was a party-based democracy where individuals can not be bigger than a party.
On BJP being anti-muslim, Mr. Chidambaram said some sections of Muslim people may have voted for BJP, as Narendra Modi himself claims, but the fact is that Mr. Modi has never fielded any Muslim candidate ever in any election in his state. “What does that mean,” he wondered.
When asked why he doesn’t join BJP, Mr. Chidambaram said BJP does not represent all sections of India and it does not even have presence in many parts of the country.
“It has got policies that would destroy the very idea of India. Theirs a blood-eyed economic model,” he said.
Asked about the next Prime Minister, Mr. Chidambaram said, “nothing is impossible, but it is unlikely because Congress party is clear that if Congress is in position to form a government it will be headed by Rahul Gandhi”.
In 2004, Mrs. Sonia Gandhi was elected leader, but the next day she declined and another leader was chosen. That model has worked, but that does not mean that we will have same model again, he said.
“If Congress is called to form the government, I’m pretty certain in my mind that Rahul Gandhi will be the Prime Minister,” he said.
Asked whether Mr. Rahul Gandhi had enough fire in his belly for the PM post, Mr. Chidambaram said: “There was enough fire in his belly when he spoke at the AICC meeting“.
On upcoming general elections, Mr. Chidambaram said it may be an unfortunate event that no party is a clear winner and no one gets majority, as the elections are likely to throw a very fractured mandate.
Meanwhile, the Finance Minister said that unravelling of AAP has already begun within weeks of it coming to power in Delhi and it remains to be seen whether an “urban rejection” of mainstream parties that was seen in Delhi elections would be replicated in other parts of the country.
“One time that Mrs Gandhi stumbled and brought in an authoritative model that was at the time of Emergency, it failed and she had to go back,” Mr. Chidambaram said.
In Delhi elections the rejection was for both Congress and BJP, he said, adding that one was ruling the state government and the other municipal bodies.
“But it is just a few weeks and we are seeing an unravelling of the Aam Aadmi Party,” he said.
Saying that he was not privy to discussions in the state party unit regarding support to AAP, Mr. Chidambaram said Congress party was divided in its decision to give outside support to AAP and it was one section favouring the support that prevailed.
Responding to a query on how BJP can be described as following ‘blood-eyed’ economic model when factories were not being destroyed in Gujarat and businessmen were happy, Chidambaram said it is not about destroying factories.
Giving examples, he said that BJP is opposing multi brand retail on premise that it would kill jobs, while the fact was just the opposite.
Mr. Chidambaram said the BJP was also opposed to PDS (Public Distribution System) reforms despite a large majority not getting food at a time India possesses huge food grain stock.
“Why is that BJP and its mascot are opposing these reforms,” Mr. Chidambaram asked.
He emphasised that a party must be strong and no individual can be stronger than the party. Party units work as a link between the government and the people as the government cannot always reach the people directly or through the bureaucracy, he said.
On disinvestment, the Finance Minister said the BJP says it is like selling family silver, but the fact is this will improve fiscal position of state-run companies and boost corporate governance.
“Their (BJP) policies are retrograde,” he said.
The government has set an ambitious target of raising about Rs 40,000 crore through disinvestment programme for the current financial year.
Talking about his home state Tamil Nadu, Mr. Chidambaram said that by the time he joined politics, Congress party had been defeated and the DMK came to power.
Later that party also split into two factions and they have mostly ruled the state, he said.
Mr. Chidambaram expressed regret that the Congress party had failed in the state.
Responding to a query on politicians he admires the most, Mr. Chidambaram said, “John Kennedy (former U.S. President) and Lee Luan Yew (of Singapore) outside India,” he said.
Jawahar Lal Nehru and Subhash Chandra Bose among those he did not know and Indira Gandhi among those he had known, he added.