Finance minister P Chidambaram, on Thursday, allayed apprehensions that foreign funds would suddenly exit the country even though the steep inflows have pushed the rupee in the “uncomfortable” zone.
Stating that the rupee value is being fuelled by steep inflows of foreign funds, he said: “The rupee is in a zone which is not (a) comfort zone at the moment. We are constantly monitoring the situation... We must find ways to manage competitive exchange rate without hurting investments.”
India is attractive
Speaking at the Hindustan Times Leadership Summit here, he said as investors are getting very good returns “I don’t believe that they are waiting to take their money out.”
As long as foreign investors find India attractive, “there is no reason to conclude that money will flow out... this defies common sense,” the finance minister said.
Referring to recent spurt in foreign investment, he said the country is having problems in handling copious flow of funds. However, “This is a new situation... We are not alarmed by it. We will gain mastery over managing the situation,” he said.
Fuelled by the steep inflow of foreign funds, the Rupee has pierced the Rs 40 to a dollar mark, recording a high of almost 11 per cent since March. Mr Chidambaram said even if the Centre fails to pursue the 123 agreement successfully, it will not affect growth.
Stating that there has been no slow down in investment, Mr Chidambaram said: “There was some slow down in certain sectors, but that is a function of demand and seasonal factors.” Without naming reforms in insurance, banking and pension sectors, he said barring the three bills, the government is going ahead with reforms process through executive actions or legislations.
“We are indeed holding back some bills for discussion. ...It is only a matter of time that bills which are stuck will become unstuck,” Mr Chidambaram said, adding, “We will not compromise on principles, we will compromise on time.” He also emphasised that the country needs high growth rate for the next 20 years to wipe out poverty.
