Promises budget to control the fiscal deficit.
By R. Chandrasekaran
CHENNAI: India’s Finance Minister P. Chidambaram is confident that skeptics will be proved wrong with their predictions of current account deficit as well as the Indian currency volatility.
The Indian currency has lot more than 10 percent since the U.S. Federal Reserve Chairman Ben Bernanke’s comments of a possible tampering of bond buying program. This will result in the widening of the current account deficit (CAD) since the inflows are also insignificant.
However, the finance minister exuded confidence in protecting the Indian currency as well as controlling the CAD. While interacting with Business Standard, he said, “I will finance the CAD fully and safely this year.”
Chidambaram has pointed out that he could present a budget that was meant to control the fiscal deficit, while experts were airing views that the minister will find it tough to control it. He added, “When you said I couldn’t control the fiscal deficit, I presented a budget that proved you wrong. I will prove you wrong again on the CAD.”
The Finance Minister also dismissed any tension between his ministry and the Reserve Bank of India (RBI) citing the central bank’s limited autonomy on issues pertaining to monetary policy. He also pointed out that as per the RBI Act, the government needs to give a written direction to the RBI if it relates to matters other than monetary policy. However, he said that it was a different matter that the provision was not used by the government.
Chidambaram defended the government’s advice to the public sector banks not to hike interest rates by pointing out that as a majority stakeholder; the government is well within its rights to take a call on policy matters.
While stating that there were not much surplus investible funds in the world now, he said that India is taking initiatives to attract investors’ attention to invest in the country like any other nation. He was proud to say that his government had delivered an average growth pace of 7.5 percent in nine years.
On the agricultural sector, Chidambaram is confident of a sterling performance by predicting that the agricultural credit off take would exceed all estimations that are running into Rs.7 trillion.
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