Bengaluru, May 9, 2018

Former Finance Minister, P Chidambaram, has said that various government agencies in the country have unbridled power and are “virtually unaccountable”.

“I know of no other period where tax authorities have been given such unlimited powers. Some of the power that is given to them is contrary to the Supreme Court judgment,” Chidambaram told BusinessLine.

Pointing to the apex court judgment, he said that if one has to search a person, one must record the reason, if one wants to reopen an assessment, one has to give a reason. If one wants to attach a property, one must give reasons. “Today, you are allowed to do that without giving any reasons and you do not have to disclose reasons, even if asked for. That is the kind of arbitrary power that has been conferred.”

If the Congress comes to power after the general elections next year, agencies and institutions like the Income Tax Department, DRI, CBI and ED will need to be reined in, Chidambaram said. “People have told me that the SEBI is the old comptroller of capital issues. No country will flourish or grow if we go back to the days of control.”

He said to kickstart the economy, the new government will have to reintroduce a proportionate regulatory regime and ensure that exports grow at least 15-20 per cent a year as “no country has achieved double-digit growth without exports growing at 20 per cent.”

On the spate of banking scams, the former Finance Minister said during the time of economic slowdown, NPAs tend to rise. He said the country did witness two episodes of NPAs in the past. One, in 2002-03 when Yashwant Sinha was the Finance Minister and one when he (Chidambaram) was Finance Minister in 2008-09, 2009-10. On both the occasions, the industry did not experience any panic. “We got over those two period of distress by deft handling and hand holding of the industry. Today, every banker is a suspect, every loan is a suspect, every legitimate loan failure is regarded as a fraud which is why in this atmosphere of scaremongering and fear the NPA problem is getting worse and worse.”

He said the banks are afraid to lend and nor is any borrowing taking place. “Bankers meet me all the time. When we ask them, how is your loan portfolio, bankers say I have not had a big ticket proposal for the last nine months”.

Chidambaram came down heavily on the terms of reference of the 15th Finance Commission stating that it was unconstitutional. “The revenue grant should be given under the Constitution. Also, 2011 is being taken for population data. If you do this, then all the Southern States, Punjab and West Bengal will lose out on huge amount of money. But it will help the States in the Hindi belt as they have not reached the replacement rate. But the Southern States have reached it and their population rate is stable. They should not penalise those States which have done well.”

The former Finance Minister made it clear that the deal between Flipkart and Walmart does not violate any norms. He said while the Congress wanted to go about having FDI retail in a phased manner, the BJP was completely opposed to it but they have now reversed their decision.

[The Hindu Business Line]