India's economy is likely to recover and achieve 6% growth in 2014-15 on the back of sound economic policies and a pick-up in investment, Finance Minister P Chidambaram said on Thursday. "If investments pick up...I think it's possible to aim and achieve a growth rate of 6% in 2014-15 even while I recognise that the international situation remains very, very tepid," he told the media at the Congress party headquarters New Delhi.
He said if the new government "follows sound policies" and the 10-point agenda outlined in the interim Budget, 2014-15 would be considerably better than 2013-14. After growing at almost 9% in 2009-10, India's economic expansion eased to 6.7% in 2011-12 and to a decade-low of 4.5% in 2012-13. The economy is expected to grow at a slightly higher pace of 4.9% in the year ended March 2014.
Chidambaram also hit out at senior BJP leader Yashwant Sinha, saying his performance as finance minister was such that he had to demit the office on July 1, 2002. "I may point out that 2000-01 and 2002-03 were the worst years since liberalisation in terms of growth and Prime Minister Vajpayee was forced to replace the Finance Minister," he said.
Chidambaram said people do not want to accept a slowdown after witnessing high GDP growth even though India's economy is expanding at a faster pace than in many other countries. Listing out achievements of the 10-year rule of the United Progressive Alliance, Chidambaram said good economics is good politics. "I would be very unhappy if somebody goes out with a message that good economics is not good politics because the opposite is the frightening thought that bad economics is good politics," he said.
Asked why there was resentment against the UPA, Chidambaram said: "I think people recognise that the UPA government has done remarkably good work...yet it is possible that some sections of people want a change..." He also said India has emerged as the world's third-largest economy in terms of purchasing power parity (PPP) and accordingly, policies should be fashioned keeping in mind that the country is a large economy and not small. India has displaced Japan to become the third-biggest economy in terms of PPP, after the US and China.
The minister said the UPA government is making all efforts to put India back on the high-growth path. "People are not accepting lower growth of 5%. I share the concern of the people, but these are the realities of the global economic situation, which is why we have to redouble our efforts to communicate to the people that we are doing much better than 170 countries of the world," he said.
Chidambaram also said that due to the model code of conduct that is in force during the elections, several government programmes have been affected. "I don't think this kind of clampdown on all activities is justified. Only something which has a very clear political significance should be frowned upon. Normal activity of the government should go on," he said.
To a query regarding suggestions from certain people associated with the BJP to replace all taxes with a banking transaction tax, Chidambaram said some leaders in the party itself had "trashed the idea." "That transaction tax being talked about in Europe is very different from the idea that has been promoted by some self-styled intellectuals in the BJP. I am glad that in the BJP itself, a couple of cool heads have trashed the idea. The idea that has been put forward by somebody in BJP is a completely woolly-headed idea," he said.