NEW DELHI: The government will present a "responsible" budget next month, finance minister P Chidambaram said on Tuesday, seeking to allay concerns that the upcoming budget, the UPA's last before next year's elections, would be a populist one.
Chidambram, in London as part of road shows being held in financial centres of Asia and Europe to woo investors, told reporters that many investors wanted to know whether "will we falter in the runup to the elections", the Press Trust of India reported. "I assured them that the polls are 15 months away and that the Budget that will be presented in February will be a responsible Budget, that we will implement many of the decisions and changes in the run-up to the polls," he was quoted as saying.
Chidambaram's statement is significant because there are apprehensions in several quarters that political compulsions and election dynamics would force the government away from the path of fiscal prudence. Chidambaram is on the last leg of the four-nation road show to sell India's reforms to investors in a bid to attract capital to fund the country's widening current account deficit that touched 5.4% of GDP in July-September quarter. He met investors in Frankfurt on Monday, after travelling to Hong Kong and Singapore last week.
The finance minister said that there was no reason to believe "in the run-up to the polls we will be anything but responsible". Asked if the Vodafone tax issue was raised at the London meeting, Chidambaram said the issue figured only peripherally. "I did clarify to them that Vodafone has formally offered to engage with the government of India in discussions. They had two rounds of discussions with the officials of government of India," he said.
"I am confident that we will find a resolution to the Vodafone issue so that we can put it behind us and move forward." Income-tax authorities have sent a fresh reminder of its Rs 14,000-crore tax demand to Vodafone for its acquisition of Hong Kong-based Hutchison Whampoa's stake in Indian telecom firm Hutchison Essar in 2007. The company had got a favourable verdict from the Supreme Court in the case, but the then finance minister and now President Pranab Mukherjee, amended the Income Tax Act, 1961 with retrospective effect in the budget for 2012-13 to effectively nullify the ruling.
The government subsequently set up a committee under tax expert Parthasarathi Shome, who is now advisor to the finance minister, to look into the amendment after it was panned by investors at home and abroad. Shome committee has suggested that the law should be applied prospectively or if applied retrospectively then the interest and penalty amount should be waived off.
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