The Hindu : National : "Loss-making PSUs must be closed or sold"

Online edition of India's National Newspaper
Wednesday, Jun 29, 2005

National

National

"Loss-making PSUs must be closed or sold"

Special Correspondent

Expand tax base, says Chidambaram

NEW DELHI: The Finance Minister, P. Chidambaram, said on Tuesday that with the inflation rate under control, he expected the interest rates to remain benign this fiscal on account of the less-than-expected borrowings.

He also stressed closing down or selling off loss-making public sector undertakings (PSUs) as a measure to check unproductive expenditure.

Briefing newspersons after his presentation to the Chief Ministers and Lt. Governors on the second day of the National Development Council (NDC) meeting here, Mr. Chidambaram said: "The economy is in a resilient mode and inflation is under control... To achieve 7.5 per cent growth, investment has to be increased from 26.3 per cent of GDP [gross domestic product] to 31.13 per cent by 2008-09."

Tall order

Conceding that planned investments were short of the Tenth Plan targets by about 50 per cent in the first three years of the Plan period, he said: "We should continue with fiscal consolidation to maintain benign inflation and the interest rate scenario to promote private investment." The 50 per cent shortfall in balance has to be made good in the remaining two years of the Plan, that is, 2005-07, "which is a tall order," he said.

On the need to contain unproductive expenditure, Mr. Chidambaram said that the chronically sick PSUs should either be closed down or sold. As for the subsidies, they have to be rationalised to cut inefficiencies and focus on better targeting.

On borrowings, he said "as per assessment of the Finance Ministry and the Reserve Bank, States will borrow less than indicated." The States were scheduled to garner about Rs. 23,000 crores this financial year. However, owing to the Twelfth Finance Commission (TFC) recommendations, their borrowings may be much less as grants and allocations from the Central pool have increased substantially.

Printer friendly page
Send this article to Friends by E-Mail

National