"India's Biggest challenge is inflation " - P.Chitambaram

Finance Minister P Chidambaram considers inflation the country's biggest challenge today and regards becoming an open market as the way forward. Expressing concern at "the relentless rise" of crude oil, commodity and food prices, he put partial blame for the rising food prices on the "foolish" diversion of food to fuel. But he did not name the US, where food crops like corn are used for making ethanol. "Food prices have also been on the rise thanks to foolish diversion of food to fuel," he said, appearing on an hour-long special about India's business and economy - "India Rising: The New Empire" - on CNBC Sunday night.

Chidambaram also did not think that recent acts of terrorist violence would affect the investment climate in India. "Please remember, terrorist violence has affected bigger cities like London, Madrid, Tokyo, New York," he told the show host Erin Burnett discussing India's economic challenges. "If terrorist violence, terrorist action affects any city in India, it concerns all of us but that does not mean that investment has been jeopardised or is in peril," Chidambaram said. "India's biggest challenge now is inflation." India is building thousands of kilometres of roads, power plants, refineries and sea ports, he said referring to investment in infrastructure. "But surely the way forward is to become an open market."

Commerce and Industry Minister Kamal Nath, too, viewed infrastructure as "also a big challenge for us to keep pace with our growth." Infrastructure is just not roads, ports and airports, but also rural roads, which connect villages, drinking water, health and access to medical facilities. Envisaging large investment in infrastructure over the next five years, he said: "It is happening. We have to have huge investments in energy sector, ports.

So that's all happening, that's on the anvil." Asked how long controls on foreign investment would stay, Kamal Nath noted that retail is one of the very few sectors which are not open. "Rest are all absolutely open and we are taking in investments." Obviously because of liberalisation, foreign direct investment (FDI) had grown from $2.2 billion four years ago to 25 billion this year, he said. Asked if India could remain self-sufficient in food in view of its growing population, Kamal Nath said: "We have been self-sufficient except in edible oil and lentils, which are imported. And unless we have a monsoon failure, we don't see a problem even with these growing numbers."

Comparing India and China, the minister said: "We call ourselves the fastest growing free market economy. And there are differences in governance too." And while India's growth story is domestic market-driven, China's growth story is export market-driven. "But China has its own genius, we have our own genius," Kamal Nath said noting the two countries have good relations even as they compete with each other. Besides India's growth story, the CNBC special also featured a look at Tata Motors and the world's cheapest car, Indian movies, the world of call centres and Burnett practicing cricket with a team in India.

The programme also took a look at India's growing upper class, including the 60-storey house being built in Mumbai by the country's wealthiest man, Mukesh Ambani. And in stark contrast, it also took a quick glance at millions of India's homeless and others living in the world's biggest slum at Dharavi.

- Economic times

Is Govt sucking blood of 5% taxpayers to run whole country of 125 crores??

Finance Minister Mr. P Chitambaram would present the General Union Finance Budget tomorrow in the Parliament House. It would be seventh budget presented by P. Chitambarm as the finance minister . he presented the first budget in year 1997 some 11 years ago.

It is strongly indicated that there would not be any tax rates cut in tomorrow's budget . India's population is 125 crores and it is horrible to know that the total percent of tax payers is still in single digits ~ 5 percent . There can be hike in taxes in order to compensate for this year's budget deficit.

However the policies of government need to be changed rather then such financial reforms. It is not at all good for the country like India which sucks taxes from only 5% of the population in order to subsidise or feed the rest of the population which is a huge number in excess of 100 crores.

Finance Minister has to bring more industries under the tax knife so as the burden which is imposed on 5% of population to feed the other 95% is reduced as government clearly earns from taxes and import duties which are applicable to just 5% of the total population.

Some of the individuals who are into agri business i.e. the farmers, agricultural land owners of excess then 50 acres does not pay any amount of tax to the government however they earn profits in crores which simply becomes black money which these farmers never show to government.

So Mr. P Chitambaram kindly wake up and rather then sucking blood of 5% of populaion increase the domain of tax payers by bringing the rich farmers who own more then 50 acres of cultivable land under the taxable individuals so that there remains unbiased growth of all sectors .

Indian Economy growth target is again pegged at 9% this year which would be however impossible to sustain as the year runs by. because government has stopped thinking about agricultural sector and is concentrating on the services sector which is more governed by the US economy rather then Indian Economy. Its a bitter truth anyways!!