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The numbers prove our estimates are broadly right: P Chidambaram

Interview with Finance minister

Business Standard  |  New Delhi 

Rahul Gandhi's stint in Cabinet would have been useful: Chidambaram

Finance Minister P Chidambaram, in an interview with Karan Thapar on CNBC-TV18’s Devil’s Advocate programme, says the data the government has, as well as the actuals, will prove the Budget estimates are correct. He also talks about the Congress party’s prospects in the coming elections. Edited excerpts:

24 hours after you claimed the fiscal deficit had been contained at 4.6 per cent of GDP, Swaminathan Aiyer wrote in The Economic Times, “This year’s figure was massaged by creative accounting to postpone expenditure to next year, while stealing next year’s revenue through massive interim dividends from public sectors undertakings.” What he’s suggesting is you have used smoke-and-mirror to try and bring the fiscal deficit down but actually, it’s considerably higher.

Last year, in this very room, he said my last year’s number was also smoke-and-mirror. My last year’s number was in the Budget estimates. We have presented the revised estimates. Nobody has been able to find fault with the number I presented in the revised estimates.

You have admitted Rs 35,000 crore of fuel subsidies have been rolled over to the next year. However, Moody’s claims you underestimated the fuel subsidy bill 30-40 per cent and, therefore, the rollover of fuel subsidy alone will be considerably more.

Last year, we rolled over Rs 45,000 crore and they said the true figure was hidden. This year, we have shown the accounts; we did rollover only Rs 45,000 crore. This year, we are rolling over Rs 35,000 crore. Wait for the revised estimates for next year and you will find we have actually rolled over only Rs 35,000 crore.

Are you saying Moody’s is wrong?

I think they don’t have the numbers I have; they don’t have the data I have.

Ashok Gulati, chairperson of the Commission for Agricultural Cost and Prices, says there is an additional Rs 80,000-crore rollover of fuel and fertiliser subsidies you haven’t admitted to. If he is correct, the fiscal deficit becomes 5.2 or 5.3 per cent.

People say the same thing year after year and when the revised estimates are presented, nobody has anything to say.

Hasn’t the Food Corporation of India (FCI), through its nominated agencies, procured for about Rs 40,000 crore more than your Rs 92,000-crore food subsidy. If that is the case, Rs 40,000 crore amounts to a rollover you haven’t acknowledged.

I am only concerned about what the Budget, the treasury gives to A or B or C. We have provided for food subsidy for the next year at Rs 1,15,000 crore and I think a strong and firm hand on the wheel can keep the food subsidy at Rs 1,15,000 crore. What FCI procures and how it finances it is a matter of the FCI, the Ministry of Consumer Affairs and banks. I am talking about the fisc.

At the end of the day, if FCI has carried out procurement for Rs 40,000 crore more than your Rs 92,000-crore food subsidy, that has to be paid for by someone and when it is paid for, it will tantamount to a rollover of subsidy.

I don’t know whether that number is correct. I don’t know how they are financing it. I am only concerned about what the fisc provides for food subsidy.

Satish Chandra, director-general of the Fertilizer Association of India, confirmed the fertiliser ministry asked for subsidy of Rs 1,05,000 crore. You have allocated about Rs 68,000 crore, which leaves a short fall of about Rs 37,000 crore, the second rollover that hasn’t been admitted to in your Budget.

Ministries will always ask for more. Last year, too, they asked for more, but we gave them less and the revised estimates show we are right. If we are wrong we are wrong by Rs 1,000-2,000 crore. We sit with ministries, arrive at a number and the revised estimate is proof of the pudding.

You keep using last year to show if you were right last year, this year, too, you will be right. But, as Business Standard revealed, last year, you only admitted to a Rs 45,000-crore rollover of fuel subsidies. The paper claims actually, the overall rollover for fuel, food and fertiliser was well over Rs 100,000 crore.

I can’t answer these claims. Somebody must tell me in the revised estimates and the accounts audited by CAG, where are the numbers they are talking about? I can only go by what I estimated last year, at the beginning of the year, or at the end of the year to say my estimates are not wrong.

You are questioning what Gulati has said in public and what Satish Chandra has told me. You are also questioning Moody’s, but the truth is Business Standard, one of our more reputed pink papers, seems to agree with both Gulati and Chandra. On Wednesday, the paper said the food and fertiliser ministries would have to make up the shortfall of about Rs 80,000 crore from “other avenues such as bonds and special banking arrangements”. On Thursday, in its leader, it criticised you for placing these two ministries in an awkward and difficult position.

I am not questioning anyone. They are questioning my numbers and I am saying I have a BE and an RE. The actuals will come in and the CAG will audit these. Money can’t be hidden in the government. Therefore, the numbers prove our estimates are broadly right. Our estimates may be wrong by one-two per cent, but that is what an estimate is. However, the numbers they are talking about are not correct and if I can go back 12 months, they said, more or less, the same thing about last year’s numbers.

If your estimate of 4.6 per cent is wrong by one-two per cent, you are talking about 5.6-6.6 per cent.

4.6 per cent won’t be wrong by one-two per cent. Last year, I was right on two estimates so far. Since you seem to be going around the same question in six different ways, all I am trying to tell you is for 2012-13, I had an RE. For 2013-14, I had a BE and an RE and nobody has been able to point out where those numbers are wrong.

The reason I am going about it, as you say, in six different ways is I am quoting to you the views of six, seven different authorities considered very credible and each of them has questioned 4.6 per cent.

I am not going to question their intelligence or their ability. However I certainly don’t agree they can question the officials of the finance ministry and our experts’ intelligence and ability.

Abheek Barua, chief economist at HDFC, while writing in Business Standard, said 4.6 per cent of GDP meant in absolute terms, the fiscal deficit is about Rs 5,24,000 crore. He says given in the first nine months of the year it stood at Rs 5,16,000 crore, you have Rs 8,000-8,100 crore for the last quarter. “Fiscal deficit is likely to be higher, both in absolute terms and as percentage of GDP,” Barua said. He is considered a reputed authority. Are you saying his calculations and his assumptions are completely fallacious?

Yes. I say that because they say it every year. I have read many articles of people you have named; every year, they say the same thing. We know how the fiscal deficit rises and then falls in the last two months. Are you suggesting people who have made Budgets for so many years in the Ministry of Finance don’t know how to make a Budget or don’t know how to arrive at an estimate?

Oh, they know how to make the Budget. In fact, they know so well how to hide the things they don’t want to reveal and that is why people question you.

I take serious exception to that statement; you haven’t produced a bit of evidence to show anyone is fudging the numbers. I think you should move on.

Are you saying all these authorities that I have named — Moody’s, Ashok Gulati, Abheek Barua and Satish Chandra — are wrong and the finance minister and the finance ministry is right?

Our estimates are right. We were right in the RE for 2012-13. We will be right in the 2013-14 RE; nobody has found a fault with the RE of 2012-13 and nobody will be able to find fault with the RE of 2013-14. Therefore, the BE of 2014-15 is right.

On Thursday, the Rajya Sabha passed the Telangana Bill amid confusion. It happened amid disturbing visuals, not just in the Rajya Sabha, but in the Lok Sabha, too.

All of us are depressed. In fact I am ashamed this is the way Parliament has transacted business, but then the alternative is even more undemocratic. If 12 MPs can paralyse a House of 542 people, pushing a Bill in din and bustle is much better than having 12 people paralyse Parliament for three weeks.

Opinion polls uniformly suggest the Congress is heading towards its worst electoral performance. India Today claims your own internal polls are showing you will end up in double digits.

All I know is I have the India Today poll of 2004 and 2009 — in both polls, please go back and verify. India Today predicted in 2004, Vajpayee would return to power and in 2009, Manmohan Singh’s government wouldn’t return to power.

Do you believe if Narendra Modi becomes prime minister, it will be bad for India for reasons beyond just party politics, reasons with which you could perhaps convince an audience?

I have said it in many statements. I think the undercurrent of Narendra Modi’s political philosophy is majoritarianism. Another streak I noticed from his speeches was I, me, mine. Look at his speeches — ‘give me power, I will give you Swaraj’, ‘give me power, I will give you 24x7 electricity’, ‘give me power, I will get the black money and give you a share of it’.

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First Published: Sat, February 22 2014. 00:45 IST