By John Chalmers, Frank Jack Daniel and Manoj Kumar
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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.
Can you give us an example of some of the steps that would be taken?
Well, I think if the volatility of the rupee has been contained and speculation has come to an end, the central bank may want to unwind some of the measures it took earlier. On the government side, sooner than later, we will have to address the issue of higher subsidies than budgeted, on both fuel and food.
What about the slowing growth and the impact that it has on tax revenues?
Customs revenues are good, but excise revenues are a bit down, but we have an ambitious plan to target the stop filers and non-filers of service tax. We have offered them an amnesty scheme, so I hope that what we lose in the excise side, we can make up in the service tax side. But direct taxes are quite satisfactory so far. So altogether, at the moment, I am not too worried about the revenue side. We will continue to make every effort to achieve the revenue target as budgeted.