India Insight

Interview: Chidambaram on Modi, Rahul Gandhi and becoming PM

By John Chalmers, Frank Jack Daniel and Manoj Kumar

(This article is website-exclusive and cannot be reproduced without permission)

P. Chidambaram, now in his third stint as finance minister, spoke to Reuters about Narendra Modi and the 2014 elections in an interview on Monday ahead of a trip to the United States. Here are edited excerpts from the interview:

If Congress returns to power in the elections next year and Rahul Gandhi is the prime minister, do you see yourself as finance minister?
That’s a question you should put to the prime minister. I am glad you acknowledge Prime Minister Rahul Gandhi but that is a question you should put to him.

What about Narendra Modi and the momentum he appears to be gaining?
I don’t know if he is gaining any momentum. I concede that he has united the rank and file of the BJP. The rank and file of the BJP was divided, the leaders are still divided, the rank and file was equally divided. But he has been able to unite the rank and file. Perhaps he has gained some traction among urban youths but I think it would be a gross exaggeration to say that people are not worried about his positions, his policies, his past, his track record. It will be a gross exaggeration to say that he is sweeping the countryside. It’s a gross exaggeration to say that he will win in every state. All this is largely media created.

But doesn’t it worry you that opinion polls show that business leaders would prefer a Prime Minister Modi, that somehow Congress can’t convince the business community that Congress is the answer when Narendra Modi is there?
In 2004, nobody gave us a chance. They said Mr Vajpayee will roar back to power. I don’t think Narendra Modi is bigger than Vajpayee, either in terms of image or appeal or acceptability … I think don’t write us off so early. And we are not facing a Vajpayee today. We are facing a Mr Narendra Modi who’s got a very, very chequered track record. Gujarat, in terms of the Raghuram Rajan committee index of development, ranks only 12 in this country.

But you’re facing a much tougher fight than in 2009 given the economic slowdown, the series of corruption problems, the third term and you have a strong candidate, perhaps not Vajpayee …
I don’t think Narendra Modi is a stronger candidate than either Vajpayee or Advani.

Interview: Chidambaram on the state of India’s economy

By John Chalmers, Frank Jack Daniel and Manoj Kumar

(This article is website-exclusive and cannot be reproduced without permission)

The Indian government will have to rein in spending and cut subsidies to meet its fiscal deficit target, Finance Minister P. Chidambaram said on Monday, underlining that an austerity drive will not be blown off course by an election due next year.

The urbane Harvard-educated lawyer, now in his third stint as finance minister, spoke to Reuters in an interview ahead of a trip to the United States. Here are edited excerpts from the interview:

Do you think that the government has done enough to pull the economy out of the crisis that we saw it in several weeks ago?
One can never say we’ve done enough. We’ve done a lot of things, but we have to do many more things, and I think we will do them in the next few weeks and months, both by the government and by the central bank.

India’s love for gold and the government’s efforts to curb it – a timeline

Google Trends shows that the term “current account deficit” is among top searches from India in 2013. Add “gold” as a comparative keyword and the searches for the commodity Indians love are far higher.

Indians buy gold for everything – investment, gifts, wedding ceremonies and auspicious days. But of late, this has become a pain for policymakers.

As the Indian economy struggles, policymakers say that high gold imports and the rising current account deficit are big concerns. India’s number one import, crude oil, and gold, it’s number two, hurt the current account deficit. While crude oil is necessary, gold is not, especially if we believe our finance minister.

L&T Infra Finance CEO upbeat on India’s economic recovery by 2015

India’s economy recorded its slowest growth in a decade in the fiscal year ending in March but the CEO of L&T Infrastructure Finance, that provides loans to companies such as Jaypee Group to develop roads and other infrastructure, is hopeful of an economic turnaround in less than two years that will boost business prospects.

The company, part of India’s largest engineering and construction conglomerate Larsen & Toubro, will likely end up dealing with a slowdown in business growth in the current financial year, but might bounce right back next year if the winner of India’s federal elections due in 2014 starts spending on infrastructure projects.

Reuters spoke to Chief Executive Officer Suneet Maheshwari about his outlook for the industry and the Indian economy. Here are excerpts from the interview:

Taxing times for reporters on the Chidambaram beat

(Any opinions expressed here are those of the author and not necessarily of Thomson Reuters)

Finance Minister P. Chidambaram’s drive to shore up government coffers is not just giving businessmen sleepless nights.

Just when reporters were taking a breather after filing stories based on inflation data on Thursday, the finance ministry sent them text messages about a press briefing. The recipients were supposed to rush to Chidambaram’s office in 15 minutes to cover what appeared to be a major policy announcement. After all, the finance minister doesn’t call on such short notice for chitchat.

Chidambaram may use Morton’s fork to make rich pay

(Any opinions expressed here are those of the author and not of Reuters)

The countdown to Budget 2013 has begun, and Finance Minister P. Chidambaram must try to keep India’s fiscal deficit from gaining weight.

One idea we’re hearing a lot lately is turning to India’s super-rich citizens to boost tax revenue and improve the tax-to-GDP ratio. In a television interview aired in January, Chidambaram’s comments on the subject didn’t reveal much, but led to media speculation over higher taxes for the well heeled.

It’s a step that may lead the Harvard-educated lawyer down a path that John Morton took more than 500 years ago. The 15th-century lord chancellor in the court of the English King Henry VII, not to mention former archbishop of Canterbury, is traditionally credited with “Morton’s fork”, a taxation principle that ensnares the rich and poor alike.

Online survey results: Expectations from Budget 2013

Days before Finance Minister P. Chidambaram unveils India’s budget for the next financial year, the online team at Reuters India conducted an informal survey of more than 200 people to learn what they expect from the 2013 budget.

In a poll conducted between Feb. 8 and Feb. 20, we asked 10 questions on issues ranging from India’s fiscal deficit to income taxes. At the time of publication, 205 respondents had shared their thoughts about India’s biggest business and economic event of the year.

Not everyone is confident that Chidambaram, already credited with saving the country from economic ruin once, will deliver. Forty-four percent of the respondents said that the budget will be geared toward pleasing voters, while 17 percent thought that it would contain harsh measures to help fix the nation’s economic problems. Thirty-nine percent thought that Chidambaram would find a balance.

from Money on the markets:

Subbarao goes against his panel, again

(Any opinions expressed here are those of the author, and not necessarily those of Thomson Reuters)

Finance Minister P. Chidambaram is not the only one walking alone.

Duvvuri Subbarao, the Reserve Bank of India (RBI) chief, also seems to be on a solitary, and one hopes, contemplative walk.

It's not just the government putting pressure on the central bank to act and cut rates.

Miffed Chidambaram widens rift with RBI

Finance Minister P. Chidambaram usually does not talk to the throng of news-hungry reporters and cameramen gathered outside the gates of the red sandstone colonial building which houses the finance ministry. A ‘no comment’ or ‘I don’t have anything to say’ suffices on an ordinary day. Tuesday, however, was not an ordinary day.

Some two hours after the Reserve Bank of India announced it would leave the repo rate unchanged, and said that battling inflation was a more important priority than backing growth, the assertive finance minister arrived in the ministry. He got out of his car and walked up to the voice recorders, microphones and camera-toting journalists waiting in the driveway.

He signalled them to quieten down, all the while having a look of contemplation on his face, as if weighing the words he was about to say very carefully. What happened next gave the clearest indication yet of a widening policy rift between the government and the Reserve Bank of India.

Market-friendly Chidambaram toes socialist line with fiscal plan

The usually crisp and precise P. Chidambaram was uncharacteristically vague on Monday while announcing the government’s fiscal consolidation plan. While pledging to bring the fiscal deficit down to 3 percent in 2016-17 from around 5.3 this fiscal, the Harvard-educated minister gave no details on how the government would achieve this feat.

Perhaps the finance minister should remember that uncertainty and lack of clarity can spook markets and investors. We saw that when the government took months to clarify the controversial GAAR norms which made foreign investors jittery.

Chidambaram’s announcement is unlikely to impress investors, rating agencies and lenders like the IMF, who want the government to slash subsidies and cut spending.

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