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Budget 2012: Fallout fears held back Pranab from reforms

Mail Today Bureau     March 19, 2012
Finance Minister Pranab Mukherjee conceded on Sunday that he could not go in for a bigbang Budget to rev up the economy because of political compulsions confronting the government.

"Knowing the mood of persons who matter here (in Parliament), I had to be extra careful and I had to make my colleagues extra careful. Therefore, many of things which could have been done, rather should have been done, could not be done just at the time of the Budget," he said in his post-Budget meeting with the captains of industry.

Mukherjee said that he had to keep in mind the prevailing ground reality that "a decision taken in one House is reversed or changed within 24 hours when the same proposal approved by one House comes to the other House".

The UPA coalition, which has difficult partners like the Trinamool Congress, does not have a clear majority in Rajya Sabha. The government is already facing a major embarrassment with Railway Minister Dinesh Trivedi being sacked by Trinamool Congress (TMC) chief Mamata Bannerjee for daring to hike rail fares by a mere 10-30 paise per km.

However, Mukherjee clearly indicated that the government would like to go for a hike in the prices of petroleum products in the coming days to reduce the subsidy burden after forging a political consensus on the issue.

"I know there are certain sectors which we shall have to address and the budgetary exercise is not the only exercise. There are other administrative issues and outside Budget decisions are to be taken... bringing political parties, state governments on board and that cannot be only through budgetary exercise," he explained.

"I am putting this question bluntly in respect of fuel subsidies...Can a country afford to import 100-120 million tonnes of crude at such high prices? That very question is looming large. We shall have to collectively address this issue," he said.

{table}While the Budget figures have been worked out with crude oil prices at $115 a barrel, prices in the international market have in recent weeks been touching almost $125 a barrel due to rising geo-political reasons, including the Iran situation and rampant speculation.

"There are various suggestions and we are working on them. We shall have to address these issues...I would like to involve all the stakeholders, bring them on board to take the corrective decision." Petrol prices were de-regulated in 2010, but the government is yet to take a decision on freeing diesel prices.

Mukherjee also sought to assuage concerns that India Inc harbours over inordinate delays in government approval for mega projects.

He said that the government is aware of the developer community's concern over the unusually long time taken in clearing the projects at different levels.

"Through the instrumentality of group of ministers, currently we are addressing mega power projects, coal linkage and environmental clearances - all three taken together."

Raheja Developers Chairman and Managing Director Navin M. Raheja said that over 50 clearances are required to start a project and it usually takes about two years to receive all the approvals.

CII president B Muthuraman said that "what comes as a disappointment is the timing of the hike in excise and service tax rates. This will not only derail the moderating trend in inflation but will also further add to the burden on industry by increasing input cost".

Courtesy: Mail Today

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