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The Rediff Budget Interview/P Chidambaram

'The Budget is not without political risks'

The final part of the post-Budget interview with former finance minister P Chidambaram. A conversation with Associate Editor Y Siva Sankar and Special Correspondent Onkar Singh.

Part I: 'Sinha had the courage to reaffirm government's commitment to reform'

If you were the finance minister, would you have handled the Budget on identical lines?

That's a completely irrelevant question. It's not important who is handling the Budget at a given time. What is important is the context. Who is the prime minister, which is the government, who are the partners of the government.

Without giving that information, a question like, 'Would you have done better?', 'Would you have done worse?' is, with great respect, a completely irrelevant question.

In the context of the coalition nature of government and its attendant political compulsions, there seems a general consensus that the finance minister has done a good job. On a scale of 10, the average score awarded to this Budget is over 7. People say this is a Reality Budget, one that is rooted in reality. Do you agree?

I said so. I said they have returned to the path of reform. They have taken carefully calibrated measures. The Budget promises a growth of 6.5 to 7 per cent. That's good. It's better than last year. Much better than last year.

The Sensex rose 4.34 per cent or 177 points. Is the stock market unduly euphoric over the Budget?

It's okay. It's par for the course.

Do you think the targets and this upbeat mood can be sustained for a considerable period of time?

Let's see what they do in the first three months, let's see what they do by July 31. Sinha has set that as the deadline for downsizing. Let's see what they do. But the figures look good. One cannot take away credit on that. Figures look good.

So, overall, Mr Sinha has done his homework well?

I think so.

To repeat an earlier question: do you think the targets are achievable?

That depends. See, for example, the Budget is not without political risks. He has listed a number of things which he wants done. Abolishing BSRB, amending the Contract Labour Regulation Act.... these are political risks... amending Chapter 5A of the Industrial Disputes Act, reducing interest rates and contractual savings, disinvestment, these are all inherent political risks. These are there.

The capacity of this government to overcome these political obstacles is a real measure of success.

During the course of the Budget speech, the Opposition seems to have got really riled only once.

Twice.

Yes, you are right, twice...

Once on the BSRB, once on disinvestment, once on contract labour. Thrice, in fact.

And industry feels the Opposition should be constructive in its criticism.

Well, I don't know what political parties will say or how they will behave. All I can point out is, there are political risks. But every government has to take calculated political risks. And the capacity of a government is measured by its capacity to overcome political obstacles.

Customs duty rationalisation -- do you think it's a job well done?

He has done nothing to customs duties. He has got four slabs, 35, 25, 15 and 5. But that's not rationalisation. He has kept the peak rate. He has only removed the surcharge which was a distortion anyway.

But I think the peak rate should be brought down. He has promised to bring down the peak rate to 20 per cent in three years, which means, he has to take three decisive, long strides in the next three years.

I would have been happy if he had brought down the peak rate to 30 per cent this year.

A lot has been said about the state electricity boards, infrastructure sector, particularly the power sector getting priority. Nothing significant seems to be happening on this front, or is there?

That's just a package which is repeated year after year after year. In fact, the Budget is not a place to talk about power sector reforms.

The place to talk about (power sector reforms) is the Chief Ministers Conference. These are pious intentions. Let us see what happens on March 3, when the chief ministers meet to discuss power sector reforms.

On an average, industry has awarded over 7 on a scale of 10 to this year's Budget. How many marks would you grant?

I don't have a composite rating. Under various heads, yes, one can rate this Budget. But if you insist on a composite rating, I would place it a little over six points out of 10.

HEAR:
P Chidambaram on the Budget in Real Audio

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Budget 2001