Govt firm on reforms: FM

Govt firm on reforms: FM

Govt firm on reforms: FM

Terming the sudden outflow of $5 billion as “unfortunate,” Finance Minister P Chidambaram on Tuesday said there should, however, be no room for pessimism as fundamentals of the economy are intact and government is moving ahead on the reforms path.

The Minister further said the government will take a call on revising the FDI caps in different sectors in the second or third week of July.

“Among the large emerging economies, we are the fastest growing economies next only to China and therefore I am confident that money will flow back into India. Investors will find India a safe destination to invest. And this temporary phase should pass. There is no need for pessimism”, he told reporters on the sidelines of a Crisil function.

Replying to a question on declining value of rupee, the Minister said, as much as $5 billion went out of India within two weeks of the statement by US Federal Reserve Chairman Ben Bernanke which was “completely misunderstood”.

“The rupee is very stable. A large amount of money flowed into India. Between January and May alone, I think a little over $5 billion flowed into India. (But) following Bernanke’s statement, $5 billion flowed out of India in a matter of two weeks. This is unfortunate”, he said.

The rupee touched all-time low of 59.98 to a dollar last week following Bernanke’s statement that the US government could slowdown purchase of bonds, depending on economic condition, later this year. Today rupee closed at 59.66.

Besides reviewing the FDI caps, the government will be taking some key decisions in the coming days, Chidambaram said.

“All these points to an economy on the move...government clearly is committed to the path of reforms. So I think we should not spread pessimism or panic. The money will flow back into India. I think things will settle down”, he added.