With an intention of cranking up slowing growth engine of Indian economy, newly appointed Finance Minister, P Chidambaram, categorizing fiscal consolidation as its top priority, appointed a new panel to advise the government on fiscal rectitude, besides assuring moderation of inflation in the medium term. However, the former Home Minister, P Chidambaram, in its first speech after being a Finance Minister on August 6, was quick to add that the burden of fiscal correction must be shared, fairly and equitably, by different classes of stakeholders.
In an attempt to re-gain the confidence of all stakeholders, FM averred that wherever mandatory, the corrective measures will be taken in order to achieve in greater clarity in tax laws, stable tax regime, a non-adversarial tax administration and a fair mechanism for dispute resolution. Further, investor friendly Finance Minister also promised to create an environment suitable for lower interest rates, which could be done by curbing on supply-side inflation, held out hopes for the mutual fund and insurance sectors, and pledged for faster clearances of foreign investment proposals, sensing the long policy inaction on the much awaited diesel and urea prices hike.
Back on the fiscal consolidation track, the new panel, which will consist of Vijay Kelkar, Indira Rajaraman and Sanjiv Misra, all of which are the members of the last Finance Commission, would help the government in formulating the path of fiscal consolidation, a target which is hard to achieve annual target, given that this would be last full-fledged financial exercise before Lok Sabha elections a year later.