New Delhi: Finance Minister P. Chidambaram Monday said the government would not rollback its decision to allow foreign direct investments (FDI) in multi-brand retail and the hike in diesel price.
Talking to mediapersons here, Chidambaram claimed that there was no threat to the United Progressive Alliance (UPA) government because of the reform measures announced last week.
“I don’t think the government faces any threat…ultimately we will be able to convince our allies that what we have done is the best for the economy,” the finance minister said.
In a major step forward to give a push to reform agenda, the Manmohan Singh government last week decided to allow up to 51 percent FDI in multi-brand retail and opened up the aviation sector to 49 percent investment by overseas airlines.
The government has also announced the sharpest ever Rs.5 per litre or 12 percent increase in diesel price.
Mamata Banerjee-led Trinamool Congress, a key ally of the UPA government, has asked the government to roll back the decisions.
However, Chidambaram said the government would be able to convince its allies that the decisions have been taken under the difficult economic situations.
“We have done whatever was doable on diesel and LPG prices. A correction was also overdue on the under-recoveries on petrol prices,” Chidambaram said.
On petrol prices, the finance minister said oil marketing companies were free to revise the price as and when they want.
He said the government would try to broaden its revenue sources and take more fiscal consolidation measures.
“There are a number of ways in which the expenditure can be cut,” he said.
On Goods and Services Tax, Chidambaram said he hoped to reach a consensus with the panel of chief ministers.
He also denied the policy measures were anything to do with the reports of the ratings agency. “We don’t frame policies for rating agencies.”
Referring to the RBI’s decision of keeping the key policy rates unchanged, the finance minister said, in the coming policy review the central bank would take measures to boost economic growth.
In the mid-quarter review of the monetary policy announced Monday, the Reserve Bank of India (RBI) kept interest rates unchanged, but reduced cash reserve ratio (CRR) by 0.25 percent to 4.5 percent that will release Rs.17,000 crore liquidity into the economy.
However, the finance minister emphasised that the government would not put any pressure on the central bank to cut rates.
“RBI is not supposed to toe the government’s line and the government has never asked the RBI to do that,” he said.