I was extra careful because of political issues: FM on budget

Faced with criticism that his Budget was a lost opportunity, a candid Finance Minister Pranab Mukherjee today said he was "extra-careful" because of political compulsions in Parliament, even as he stressed the problem of rising fuel subsidies has to be tackled head-on.

"... knowing the mood of the persons who matter here (in Parliament), I had to be extra careful and I had to make my colleagues extra careful. Therefore, many of things which could have been done, rather should have been done, could not be done just at the time of the Budget," he said in his customary post-Budget meeting with industry leaders here.

Pointing out that the policy shifts among political parties are taking place quickly, the Minister said, he had to keep in mind the prevailing ground reality that a "decision taken in one House is reversed or changed within 24 hours, when the same proposal approved by one House comes to the other House".

The UPA coalition, which has difficult partners like Trinamool Congress, does not have a clear majority in the Rajya Sabha.

The Finance Minister said the government will have to take the issue of rising fuel subsidies head on with the support of political parties and the state governments.

As the amount for major subsidies including food, fuel and fertiliser at Rs 1.79 lakh crore for 2012-13 has been pegged at lower level than the current year's Rs 2.08 lakh crore, he indicated that the government may be compelled to go in for market adjusted prices of diesel and cooking gas.

"I know there are certain sectors, where we shall have to address and budgetary exercise is not the only exercise. There are other administrative and outside Budget decisions are to be taken ... bringing the political parties, state government on board and that cannot be only through Budgetary exercise".

Mukherjee made it clear that it would not be possible for the government to bear the increasing subsidy burden.

"I am putting this question bluntly in respect of fuel subsidies ... Can a country afford to import 100-120 million tonnes of crude (at high) prices? ... that very question is looming large... We shall have to collectively address this issues," he said.

Crude oil prices have been rising due to geo-political reasons, including the Iran situation. The prices had touched a high of USD 125 a barrel earlier this month.

"There are various suggestions, we are working on it. We shall have to address these issues ...I would like to involve all the stakeholders, bring them on broad to take the corrective decision," he added.

The government has refrained from increasing prices of diesel, kerosene and cooking gas despite global crude oil prices witnessing a sharp rise.

Petrol prices were de-regulated in 2010 but the government is yet to take a decision on freeing diesel prices.

High subsidies are putting pressure on the country's fiscal deficit, which is likely to touch 5.9 per cent of the GDP this fiscal and 5.1 per cent in 2012-13.

On concerns over inordinate delays in giving approval to mega projects, Mukherjee said the government is "trying to reduce the time lag so that the projects could be cleared as expeditiously as possible".

He further expressed hope that the Direct Taxes Code (DTC) legislation would be in place in 2012-13, but it would be made effective from April 1, 2013,onwards.

On the proposed Goods and Services Tax (GST) regime, the Finance Minister stressed upon political consensus for early implementation of the legislation.