More Reforms Initiatives in Next 2 To 4 Months: Chidambaram

Foreign Direct Investment

The Minister further said it is important to ensure that both foreign and domestic investors continue to repose faith in the Indian economy, which he said is expected to grow by 6.1-6.7 per cent during the current financial year, up from 5 per cent in 2012-13.

Mr. Chidambaram said there is need to take a relook at the Foreign Direct Investment (FDI) caps which were fixed long ago.

“We need to open our economy more. We have to give more space for FDI,” he said, adding the FDI caps could be removed if found no longer useful.

Two separate committees — under RBI and the Finance Ministry — are looking into various aspects of the foreign investment, including removal or raising of the FDI caps.

Promoting FDI was also essential to deal with the problem of widening Current Account Deficit (CAD), he said, adding it is likely to be below 5 per cent during the financial year 2012-13.

“CAD is indeed high... (it) is more worrying that fiscal deficit. In 2012—13, CAD is expected to be USD 90—94 billion. The satisfying aspect of this is that we have financed it completely without drawing down our reserves. There have been copious inflows,” he added.

The Minister hoped that CAD would be close to 5 per cent during 2012—13 and “going forward, we will bring it down. The way to do that is to boost exports.

“If we can conserve oil consumption by 10 per cent, we can save $17 billion. And if we can control our passion for gold, we can save many more billion dollars. It’s a difficult act but I am confident that with the steps we are taking to encourage inward inflows, we will be able to bring it down,” the Minister said.

Mr. Chidambaram said the recent initiatives take by the Cabinet Committee on Investment (CCI) would spur investment activity which is essential for promoting growth and job creation.

“In the previous three meetings, the CCI had cleared projects in sectors like oil and gas, road and power (envisaging) investments worth $14 billion...As we remove investment bottlenecks, you will find growth picking up.

Growth in 2013—14 will be between 6.1—6.7 per cent,” the Minister said.

He expressed confidence that the growth rate would move up to 7 per cent in 2015—16, without fuelling inflationary expectations.

“I am happy to move up one rung at a time. In 2015—16, we will be getting over 7 per cent growth without fuelling inflation. Confidence in Indian economy is rising,” Mr. Chidambaram said.

Also Read:
10 Countries with Highest Gold Reserves
Why India Is Loosing FDI Investments?