As the Sensex scaled to a lifetime high on the last day of the Hindu Samvat year 2069, Finance Minister P Chidambaram on Friday sought to bring more Diwali cheer, claiming that the recent steps taken both by the government and Reserve Bank are yielding results.
Addressing a press conference here, Chidambaram said that green shoots of revival are visible in the economy and hinted that worst phase for the Indian economy is nearing its end. He also feels that fiscal discipline will help moderate inflation.
Pinning hopes on a bumper harvest, export recovery and sliding gold imports, which will help the government to rein in worrisome current account deficit (CAD) at $60 billion from an earlier estimate of $70 billion this fiscal, the Finance Minister said the fiscal deficit target of 4.8 per cent of GDP and the goal of raising Rs 40,000 crore from disinvestment would be met.
“I am confident that we will be able to adhere to the red line on the fiscal deficit” Chidambaram said.
The CAD deficit touched the all time high of $88.2 billion or 4.8 per cent of the GDP in 2013-14.
“Core sector growth...strong monsoon and healthy exports augur well for economic growth. There are still many challenges, most important being inflation and reviving investment.
“I look forward to moderation in inflation. We have a lot of evidence to show that inflation is fuelled by food,” he said.
“State governments have to take greater initiative so that fruits and vegetables are distributed properly. There is power to take action against hoarders and that rests with state governments,” he added.
“But I think there will be green shoots even in investment. We are confident that the measures taken by RBI and our own measures at maintaining fiscal discipline will eventually bring about a moderation of inflation,” Chidambaram said
He said the RBI’s policy should be seen in the context of not only high inflation but also currency depreciation.
“The markets seem to be very happy. More than anyone else, the markets seem to welcome the RBI and government measures. But I would caution investors against excessive exuberance,” he said.
Overseas investors have been buyers for 20 consecutive sessions till Thursday, bringing their total buying to nearly Rs 17,900 crore in the period.
Asking India Inc to have full faith in the growth of the economy, the Finance Minister said that the government will extend full support to new investments that will help reboot Indian economy. “Corporates need not sit on cash they should start investing,” he said.
According to him, the government will endeavour to get the long-pending insurance amendment Bill, which seeks to raise the FDI in the sector to 49 per cent from 26 per cent, passed in the forthcoming Winter Session of Parliament.
As regards the Direct Taxes Code (DTC), he said, the draft amendments have been finalised and would be placed before the Cabinet for approval.
Reflecting a pick up in the industrial activity, the core sector industries recorded 8 per cent growth in September, highest in the past 11 months.