New Delhi: Finance Minister P Chidambaram on Monday ruled out roll back of the decisions on diesel, LPG and multi-brand retail, saying there is no threat to the government despite some key allies putting pressure on UPA's largest constituent - the Congress - to reverse or at least partially announce a relief. Chidambaram said that the government would take allies into confidence and differences on economic reforms would be sorted out.
"UPA faces no threat. The allies will continue to support us (and) we will be able to convince allies. Steps taken by the government on fuel hike were necessary. We will be able to convince our allies. West Bengal Chief Minister Mamata Banerjee has said economy faces grave threats," he said. "There was correction overdue in petrol. Petrol was deregulated and is free to be revised even on daily basis. LPG cylinder cap could change consumption behaviour," he added.
He said that more decisions on reforms will be taken in the next few days by SEBI, Department of Revenue and Disinvestment. Chidambaram further said that the disinvestment of four PSUs is expected in next six months, which will help reach the Rs 30,000 crore target.
Allaying apprehensions on growth, he said the government would try to hold fiscal deficit at 5.1 per cent of GDP in FY13. “Some slippage expected in fiscal deficit target during the year. Steps will be taken to augment resources by better tax administration and compliance, other sources and expenditure cut,” he said.
On the taxation issue, he said that the final implementation of General Anti-Avoidance Rules (GAAR) is likely soon. "Reversing decisions should not be done hastily. Vodafone tax matter will have to wait for some panel reconsideration,” he said.
The Finance Minister said that the Cabinet Committee on Economic Affairs will meet on Thursday to discuss several issues like capital markets, taxation, and disinvestment. He, however, added that it’s too early to talk about the GDP estimate for current fiscal.
He said that the government would look to maximise revenue from existing sources. “We will have to curtail some expenditure. We will focus on efficiency of tax administration in areas like service tax.”
Chidambaram dismissed the perception that government plunged into action because of a "looming threat" of downgrading by rating agencies.
He said government does not frame policy for rating agencies. "We don't make policies to get rating by credit rating agencies. We are making policies, what are doable and what are implementable. We make policies which have broad acceptance. We see that this is ultimately what government can do. What government does can prompt them (rating agencies) to rate government bonds," he said.
The Manmohan Singh government in a space of two days sent out a firm message that the reform button had finally been pushed, but the Trinamool Congress was quick to denounce the decision to hike diesel prices, put a cap on subsidised LPG cylinder, and FDI in multi-brand retail and aviation.
While Trinamool supremo and West Bengal Chief Minister Mamata Banerjee issued a 72-hour deadline to the Congress to roll back the decisions, the party has been sounding confident that she can be persuaded.
Congress spokesperson Rashid Alvi on Sunday remained confident of "sorting out" differences and described Mamata as an "important and valued colleague" in the UPA.
UPA managers are confident of numbers. They say even if Mamata walks out of government, Samajwadi Party and Bahujan Samaj Party can be brought in to push in reforms. SP chief Mulayam Singh's opposition over FDI in retail can be won over with a package for Uttar Pradesh and BSP’s Mayawati too can be talked through.
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