Is Chidu's Fiscal Planning Credible and Feasible?

Bangalore: As Finance Minister announced the "credible and feasible" fiscal plan, one should not believe it blindly. While addressing country’s problems, Chidambaram said, “I consider that it is my duty to place before the people the truth. India’s economy is challenged,” quoted by Business Standard.

Out of all the discussion, two questions clearly come into the picture. One, how can Chidambaram announce a “credible” five-year plan when his party’s lease on power ends in 18 months? He should have emphasized on 18 months plan rather than five year plan, which the succeeding party will not follow. And secondly, Chidambaram had been handling country’s finance ministry for the last six to seven years, but he still has no perfect plan in terms of what to do to get the country out of this crisis.

While ruling out complete withdrawal of food, fuel and fertilizer subsidies, Chidambaram told the annual Economic Editors' conference that the fiscal plan, which will be based on a report by the Vijay Kelkar committee, will look at rationalizing subsidies that could result in further price revision, besides better delivery through means such as direct cash transfers. The plan to be announced shortly will lay the roadmap for lower fiscal and revenue deficits over the next five years, with a beginning to be made this year itself, a move that is being closely watched by the markets and ratings agencies. Chidambaram said, "It is our intention to take steps in this direction so that subsidies are transferred to the beneficiaries directly, quickly and efficiently. I also visualize huge savings in the subsidies bill."