Finance Minister P. Chidambaram on Monday received a “black eye” for his “stupid” comment that India’s financial management is “not the same” as US-based Fidelity Investments.
The remark, made in response to a question about India’s fiscal deficit, has triggered outrage and anger among financial experts.
Mr Chidambalam said the country’s “internal finance system” is “much more advanced” than Fidelity’s.
“It’s not the same, but we have a much more sophisticated financial management system, which is much more advanced,” he told reporters.
Fidelity, which has about $1 trillion in assets under management, has had to take drastic measures to meet its debt obligations, including cutting back on dividend payments and limiting its exposure to foreign bonds.
It recently agreed to pay about $500 million in back taxes on the $2.5 billion in dividend it paid in 2013.
The Finance Ministry is investigating whether Mr Chidaparam had violated rules to avoid tax.
“The Finance Minister should clarify whether the Finance Minister has violated the rules or not.
There are many rules, many regulations, many procedures that are there for a reason, and these rules are designed for a purpose,” said Naveen Agarwal, a senior fellow at the Observer Research Foundation.
The finance ministry has said that Mr Chadambaram has no authority to make the comments.
“There is no reason to question the validity of the minister’s statement,” the ministry said in a statement.