''About 80 per cent of loans sought by borrowers are well within the range of Rs 20 lakh and this lot hardly defaults. Therefore, the RBI might declare interest reliefs for those that seek loans within the limit of Rs 20 lakh for housing purposes,'' Mr Chidambaram told reporters here today. He said the top priority of the UPA government was to restrict the inflation rate close to four per cent and reduce interest rates for loans that are within the limit of Rs 20 lakh as maximum defaults are noticed on loans above the ceiling of Rs 20 lakh.
According to the Finance Minister, ''the agriculture sector should be subsidised on lines of economies of scale but in India, no one is willing to give up his or her share of subsidies and therefore, every thing has to be done within the limits of affordability.'' He justified loan waivers granted to small and marginal farmers in the budget proposals for 2008-09, strongly arguing that the industry enjoys much more exemptions than the amount of Rs 60,000 crore that would be compensated to banking systems from government exchequer.
On the issue of double taxation, both on sale of shares as well as declaration of dividends, Mr Chidambaram contended that these two are separate issues for which distinction is sought to be bridged or avoided.
The Finance Minister defended each of his budget proposals saying all these are made for ensuring inclusive growth with the GDP touching close to nine per cent during the current fiscal and subsequently taking it to the 10 per cent mark in the years to come.
''One of the distinctions of Budget 2008-09 which so far has gone unnoticed is the state allocations in terms of taxes, grants and loans which has been hiked to Rs 3,06,000 crore for fiscal 2008-09.
This is a substantial increase which has hardly been affected in previous regimes,'' the Finance Minister said.
For current fiscal ending March 2008, all states would receive Central assistance in terms of taxes, grants and loans to the extent of Rs 2,63,000 crore, he added.
According to the Minister, the NDA government achieved the GDP average ratio of 5.9 per cent in six years of their regime as against the average GDP growth of 8.8 per cent of UPA government which is higher by 2.9 per cent and the increase is measured at 290 basis points.
''The fiscal deficit which the UPA government inherited was at 4.8 per cent which has already been brought down significantly and the government intends to reduce it at 2.5 per cent. The revenue deficit has been 3.6 per cent in the previous regime which has already been brought down to one per cent and shortly it would be made nil because of the prudent fiscal consolidation affected under the regime of UPA government,'' the Finance Minister said.
Mr Chidambaram said there are many problems on the fiscal fronts which would be adequately addressed to ensure that fiscal management of Central and state finance are done to avail relief of higher growth to each citizen of the country.