PC byte: We logged economy out of crisis, into growth mode
19 Feb 2014 6:05 AM IST
Rejecting description of his interim Budget as populist, he said over the last couple of years the government was trying to do a ‘rescue act’ like every other government in the world was doing.
‘Over the last couple of years we are trying to do a rescue act like every other government in the world is doing. I am at pains to emphasise that we are not alone. ‘Every Finance Minister says that he is engaged in a rescue act. Therefore what I did in 2013 Budget and what I have proposed in the 2014 interim Budget must be seen as part of getting back to growth when the economy in the world is fragile and I think we have succeeded in a fair measure,’ Chidambaram said. He said the economy has ‘clawed back’ to 4.4 per cent in Q1, 4.8 per cent in Q2 and going by the CSO's estimate a minimum of 5.2 per cent in Q3 and Q4 taken together for the half year is likely. ‘Very few countries have been able to do this over the last 18 months. Therefore while I am not entirely pleased with what we have been able to achieve, I must emphasise that we have achieved our goals in fair measure and going forward if the governments follow the 10-point agenda that I have laid down towards the end of my speech, we will get back to the high growth path,’ he said when asked how he would define his Budget.
When told that his critics would say the problems in India are not only due to international situation, he said, ‘I did not say that either. But the problems in India and the problems in every country of the world are largely due to the international situation.’
He acknowledged that in the past some mistakes had been made. Asked what they were, Chidambaram referred to economist T N Srinivasan who had written a monograph which said the first stimulus package was perhaps necessary, but deeper analysis may have shown that the second and third stimulus packages were not necessary. ‘But that is a judgement he makes in hindsight.
Given the circumstances then, given the data available then, a decision was taken to have three stimulus packages in succession. ‘There were clearly benefits out of the 3 packages. The growth rate was above 8 per cent. But the downside was that the fiscal deficit limits were breached and inflation went almost out of control. In hindsight some things are clear. But what human beings don't have is luxury of hindsight,’ he said.
Asked what in hindsight went wrong, he said, ‘In hindsight I would have said despite the slowdown, despite the threat of a slowdown perhaps we should have stuck to the fiscal consolidation path with only some minor or temporary relaxation. That is in hindsight.’
Asked what his successor would inherit, he said, ‘he will inherit an improved economy, a more stable economy and an economy that is growing. He will also inherit a world that is turbulent.’
Reacting to reactions to his vote on account budget, he said, ‘a vote on account is usually expected to be a non-event. But the reactions to the Budget mean that we must have done something to catch the imagination of both our supports as well as our critics. The points we have made in the Budget have gone home.’
He said the points made in the Budget have not gone unnoticed. ‘I am pleased with the fact that the points that I have made have gone home. They have not gone unnoticed. The worst thing that can happen to either a politician or to an event is that it goes unnoticed.’
‘Over the last couple of years we are trying to do a rescue act like every other government in the world is doing. I am at pains to emphasise that we are not alone. ‘Every Finance Minister says that he is engaged in a rescue act. Therefore what I did in 2013 Budget and what I have proposed in the 2014 interim Budget must be seen as part of getting back to growth when the economy in the world is fragile and I think we have succeeded in a fair measure,’ Chidambaram said. He said the economy has ‘clawed back’ to 4.4 per cent in Q1, 4.8 per cent in Q2 and going by the CSO's estimate a minimum of 5.2 per cent in Q3 and Q4 taken together for the half year is likely. ‘Very few countries have been able to do this over the last 18 months. Therefore while I am not entirely pleased with what we have been able to achieve, I must emphasise that we have achieved our goals in fair measure and going forward if the governments follow the 10-point agenda that I have laid down towards the end of my speech, we will get back to the high growth path,’ he said when asked how he would define his Budget.
When told that his critics would say the problems in India are not only due to international situation, he said, ‘I did not say that either. But the problems in India and the problems in every country of the world are largely due to the international situation.’
He acknowledged that in the past some mistakes had been made. Asked what they were, Chidambaram referred to economist T N Srinivasan who had written a monograph which said the first stimulus package was perhaps necessary, but deeper analysis may have shown that the second and third stimulus packages were not necessary. ‘But that is a judgement he makes in hindsight.
Given the circumstances then, given the data available then, a decision was taken to have three stimulus packages in succession. ‘There were clearly benefits out of the 3 packages. The growth rate was above 8 per cent. But the downside was that the fiscal deficit limits were breached and inflation went almost out of control. In hindsight some things are clear. But what human beings don't have is luxury of hindsight,’ he said.
Asked what in hindsight went wrong, he said, ‘In hindsight I would have said despite the slowdown, despite the threat of a slowdown perhaps we should have stuck to the fiscal consolidation path with only some minor or temporary relaxation. That is in hindsight.’
Asked what his successor would inherit, he said, ‘he will inherit an improved economy, a more stable economy and an economy that is growing. He will also inherit a world that is turbulent.’
Reacting to reactions to his vote on account budget, he said, ‘a vote on account is usually expected to be a non-event. But the reactions to the Budget mean that we must have done something to catch the imagination of both our supports as well as our critics. The points we have made in the Budget have gone home.’
He said the points made in the Budget have not gone unnoticed. ‘I am pleased with the fact that the points that I have made have gone home. They have not gone unnoticed. The worst thing that can happen to either a politician or to an event is that it goes unnoticed.’
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