Govt to take more reform measures to spur growth: FM
Worried about sticky inflation numbers
“I am confident that the steps we have taken, and some more that we will take in the next few weeks, will help turn the Indian economy around,” Chidambaram said, addressing the ‘Delhi Economics Conclave’, which is organised jointly by Department of Economic Affairs, the National Institute of Public Finance and Policy and Confederation of Indian Industry.
The government has taken a raft of reform measures, including allowing FDI in multi-brand retail and opening insurance and pension sectors to foreign investors in the earlier weeks, which have translated into a robust foreign portfolio capital inflow amounting to $21 billion up to November 30.
The stock markets leading indices too have risen by about 11.5 per cent between August 1 and December 13, pointing to growing investor confidence and the return of the small investor.
On Thursday, the Cabinet took some important decisions to perk up reforms that included setting up of the Cabinet Committee on Investment to quicken the pace of decision making in critical infrastructure projects. The Cabinet also approved a landmark draft Bill on Land Acquisition and a new investment policy for urea plants.
Chidambaram, however, expressed concern over sticky retail inflation numbers, which came a little below 10 per cent, higher than expected trade deficit hovering at 10.3 per cent and the Current Account Deficit at 4.2 per cent of GDP.
The Finance Minister said that these macroeconomic imbalances posed challenges, which called for bold and innovative measures.
Further, he said, “The emerging economies are affected not only because of the fall in international demand for their products, but also because of the severely diminished policy space, they have to stimulate their economies after the crisis.
“Higher inflation and higher fiscal deficits make it hard for the emerging economies, with few exceptions, to resort to standard counter-cyclical measures.”
Chidambaram also asked Asian G20 member nations and Russia to increase resource base of the Asian Development Bank for development of the region.
“What scope is there for international cooperation in reviving growth, the theme of this conference? In their declaration at Los Cabos earlier in the year, G20 leaders declared that all G20 members will take the necessary actions to strengthen global growth and restore confidence,” he said.