Is Chidu's Fiscal Planning Credible and Feasible?

The diesel price has already been raised by 5 a litre and restricted the availability of subsidized cooking gas, though subsidized fuel is still estimated to leave an 1.67 lakh crore hole on the books of state-owned oil marketing companies. Diesel price may further see a rise as oil firms are losing 11.65 a litre by selling diesel below the prevailing international price. While subsidies may address some of the expenditure-related concerns, Chidambaram said he was hopeful of garnering 40,000 crore from 2G spectrum and 30,000 crore from disinvestment, which is expected to kick off with the stake sale in Rashtriya Ispat Nigam Ltd. A large subsidy bill is one of the biggest concerns for ratings agencies, which have threatened to downgrade India to junk grade if the government does not take immediate steps to reverse the trend.

Similarly, to address investor concerns over GAAR and retrospective tax law changes, Chidambaram indicated that the government may not wait until the budget for any amendments and will push the changes as early as possible. At the same time, he said a final view was yet to be taken as the revenue department was examining the recommendations of the Parthasarthi Shome committee.

He also said that based on the feedback from foreign institutional investors, whom he met in Mumbai on Saturday, the government will initiate further steps. Apart from the direct tax amendments, the minister said that getting the Opposition on board for several important legislative changes was going to be a key part of his plan. While promising to meet political parties to seek support for increasing the foreign investment ceiling in insurance from 26 percent to 49 percent, Chidambaram said he will meet Bihar deputy chief minister Sushil Kumar Modi on October 22 to resolve issues related to the implementation of goods and services tax.