New Delhi: With foreign experts saying their bit on India and the Indian economy here is what the man on the inside has to say. Finance Minister P Chidambaram says those involved in the IPO scams will be severely punished. But what is more, he does say that he will look into the luxury tax suggestion as put forward by the Left party.
Excerpts from CNBC-TV18's exclusive interview with Finance Minister P Chidambaram
How optimistic are you, that this time around, you are going to see bilateral trade doubling between India and Japan?
Last year, it grew at 20 per cent and I think the Japanese are trying to diversify; they are spreading their risks and they have some problems with China, which I wish wouldn't intensify, but at present, is the right moment to seize on the opportunity and to attract Japanese investment to India. I think we will succeed to a large measure.
In November 05, when the Japanese delegation visited India they expressed concern that Japanese money was not coming into India because of bad infrastructure, electricity, roads and now you are inviting the Japanese to invest in infrastructure, how much has the climate changed since then?
The last delegation was no ordinary delegation, it was the Nippon Keidanren, (Japan Federation of Economic Organizations). For many years, the Keidanren has taken the view that India is the business of the Japan-India chamber of commerce and it is for the first time, that they have taken a direct interest in India and so I told them don't complain about infrastructure and if you do so, then you are only doing what we are doing in India and that we want investment in infrastructure and that this is where great opportunities are. Therefore, I told them come into telecomm, into power, port facilities, airport modernisation, and also into our road programme.
Who are the two major Japanese insurance players scouting for Indian partners and how serious are their plans at this point in time?
I am not sure if I am at liberty to disclose their names but one is a large non-life player and one is a life player, and both of them have expressed interest and I have offered to work with them and find them partners.
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FDI in retailing - where do things currently stand on this matter?
Commerce Minister Kamal Nath is leading the debate from the government's side and a Group of Ministers have looked at it and we think there are ways to make a beginning - for example, we could make a beginning with single brand outlets, beginning in food products and beginning in metropolitan cities.
I think Chief Minister Buddhadev Bhattacharya expressed some interest in opening up retail in food products and food processing industry. I think somewhere, we will make a beginning but it is important to make a beginning and a breakthrough. Let's hope we can do that in six months.
The National Investment Fund, NIF, is a scheme that your government started. This was the answer to the way disinvestment had been done under the NDA government. It hasn't been quite a success at all. I mean nothing much has happened. Even Suzuki apparently the money is not really Maruti's. It is not actually going to go in the National Investment Fund.
I have a choice there. I could put it into the NIF, but strictly I need not because this is not public sector. But I could put it into the NIF.
Have you made up your mind yet?
No that I will decide next month. But at least two companies have been cleared by CCA for disinvestments, and those two ministries have been notified that we are going ahead with disinvestments. I expect both of them to hit the market in two to three months. And that money, will clearly go to the National Investment Fund. But the fund has been constituted.
Are you disappointed with it though?
I am disappointed with the pace. But when I took on this job, I knew that while the objectives can be achieved, the pace at which they can be achieved will necessarily be slower because we are in a coalition.
The National Investment Commission. This is another idea that you had started and is headed by Ratan Tata and once again a partnership between the industry and the government. But nothing much is heard, about what the investment commission is talking about?
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They are not a government commission. They are private sector players, they do silent work and they work with state governments. They worked with the Orissa government over the Posco deal, they are working with the Himachal government on the cement project.
They have worked with RBI and much of that work is silent and unknown. A lot of regulations of RBI were re-drafted on their advice, and they are now working with foreign investors. Groups of Indians settled in the US, they are working with them, Rajat Gupta and few others. Their work is more silent in nature, and you can't look at that as another government commission.
Those who have been found guilty in the IPO allotment issue, will be severely punished. What kind of severe punishment are you talking about ?
These cases have not yet been investigated. They are under investigation. I think some temporary orders have been passed, barring some players from doing this and that. I think when the investigations are complete and then they will be given an opportunity to state their case, then punishment will be stringent.
Are you being updated by the regulator in terms of what is really happening in the market?
At a direct level, yes, the chairman of the Sebi keeps me informed.
How concerned are you about the health of the capital market at this point?
We did gain mastery over the penny stock issue and penny stock speculators are no longer on the scene. We did control them and all that's happening with IPOs, I am told that this has been going on for a year and half or two may be. The two that have come to light are, Yes Bank and IDFC - may be there are some earlier ones. But I am absolutely confident that none of the new issues that hit the market beginning January 16 are not at risk because I think, systems have been put in place to ensure that no such multiple account scams can happen.
In the budget, is there going to be a review in terms of luxury tax and how much of the Left parties recommendations are you seriously looking at?
I think it is really more than the Left parties. It is people like you, who are complaining about FBT. Perquisites are taxed universally. There is vertical equity and horizontal equity in taxing perquisites. Show me a country which does not tax perquisites. A review is always possible but recession is not on board.
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