Mamata to bring no confidence motion

Rangarajan hopes key legislation be passed

As erstwhile ally of the UPA--Trinamool Congress-- threatened to bring out a no-confidence motion against the government in the upcoming winter session of Parliament, key Prime Minister's economic adviser C Rangarajan today said attempts will be made to ensure that important pieces of legislation are passed.

Even as many raised doubts over meeting revised fiscal deficit target of 5.3 per cent of GDP for 2012-13, the Prime Minister's Economic Advisory Council (PMEAC) chairman said the new goal post is doable.

On the sidelines of a function for a commemorative lecture on 30 years of Exim Bank, he said movement of prices will play a crucial role in RBI’s decision on the repo rate.

He said capital inflows would be sufficient to finance the current account deficit (CAD) this fiscal and the rupee will hover around its present value against the dollar.

"I think the attempt will be to see that the necessary legislations are passed," Rangarajan said.

So, one should hope that Parliament should function as normal and necessary pieces of legislation will be passed.

Insurance bill to hike foreign direct investment from 26 per cent to 49 per cent, Banking Laws (Amendment) Bill to give powers to RBI to supresede board of banks as well as increase cap on the voting power of stakeholders in banks to 26 per cent from 10 per cent, pension reform bill, Forward Contract Regulation and Development Act (amendment) Bill are some of the key economic bills likely to be brought in the winter session.

Meanwhile, Trinamool Congress chief Mamata Banerjee has announced that her party will bring no-confidence motion against the UPA government on foreign direct investment (FDI) in multi-brand retail and corruption. The party is now garnering support for admissibility of the motion in the Lok Sabha. Parliament is scheduled to begin the winter session from Thursday.

On reining in fiscal deficit at 5.3 per cent for 2012-13 despite spectrum sale not yielding much and disinvestment not happening so far, Rangarajan said,"I think our attempt will be to see that we remain as close as possible to revised fiscal deficit that has been indicated by the finance ministry. All efforts will be made to get to that number."

Although the government had pegged fiscal deficit for the current financial year at 5.1 per cent of the GDP in the budget, it has revised the target to 5.3 per cent in view of subdued revenue collection and rising fuel and food subsidy bills.   

"I think still there are about 4-5  months more for the end of the year. There are many actions that are possible," he said when asked how the government will meet fiscal deficit target after lukewarm response to telecom spectrum auction.   

The PMEAC chief's comments come in the backdrop of lukewarm response to the 2G spectrum auction which could fetch the government only Rs 9,407 crore as against the target of Rs 40,000 crore.

The government intends to go in for another round of spectrum auction before end of the current fiscal.    Meanwhile,  no disinvestment in public sector units happened so far this fiscal, even as the budget estimated Rs 30,000 crore to come from this route.

On CAD, Rngarajan said: "I think the capital inflows during the current year will be adequate to cover CAD."   

CAD touched a record level of 4.2 per cent of GDP last fiscal. Though, it is expected that CAD might be lower than this level, in the first quarter of this fiscal it was 3.9 per cent against 3.8 per cent in the corresponding period of last fiscal, even as it was largely due to exchange rate movement.

On the rupee value against the dollar he said,"...I believe the rupee will stay around this particular range (Rs 54-55 a dollar) even by the end of this year."

The rupee had slipped below 55-level against dollar on last Friday, recording the largest fall among its major peers globally in the past 30 days. 

On the repo rate cut by the Reserve Bank, Rangarajan said: "We need to watch the behaviour of prices for some more time. Of course, the Reserve Bank will take all factors into account, but there is still some time for Reserve Bank to take a decision." 

The RBI will come out with the mid-quarter review of monetary policy on December 18. The third quarter will be announced on January 29.   

RBI, in its second quarterly review of policy last month, had refrained from lowering key interest rates in view of high inflation despite pressure from the industry and nudging by the Finance Ministry.