Green shoots visible, CAD to come down to $60 bn: P Chidambaram

Nov 01 2013, 19:08 IST
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Chidambaram further said the government will endeavour to get the long-pending insurance amendment bill. Chidambaram further said the government will endeavour to get the long-pending insurance amendment bill.
SummaryCore sector growth...strong monsoon and healthy exports augur well for economic growth.

Hinting that the worst for the economy may be over, Finance Minister P Chidambaram today said the country will have a bumper harvest and the troublesome CAD will come down to USD 60 billion on back of rising exports and declining gold imports.

"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.

"But I think there will be green shoots even in investment. We are confident that the measures taken by the RBI and our own measures at maintaining fiscal discipline will eventually bring about a moderation of inflation", he said while addressing a press conference here.

The Minister also expressed the government's resolve to extend full support to new investment proposals and said that corporates need not sit on cash. He asked them to start investing.

Chidambaram further said 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.

Referring to Current Account Deficit (CAD), the difference between the inflow and outflow of foreign exchange, Chidambaram said that he was hopeful of reducing it to USD 60 billion, down from the earlier estimate of USD 70 billion.

The CAD deficit touched the all time high of USD 88.2 billion or 4.8 per cent of the GDP in 2013-14.

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.

Referring to price rise, Chidambaram said good monsoon and subsequent bumper agriculture output will improve the inflationary situation.

On fiscal deficit, the Minister said the budgetary target of 4.8 per cent of the GDP would be met and also the Rs 40,000 crore disinvestment target.

"I am confident that we will be able to adhere to the red line on the fiscal deficit" Chidambaram said.

Recalling his recent US visit, he said, "I got the impression that they continue to retain faith in India's economy and that the investment cycle which in my view is revived, will only gain momentum in next few weeks and months."

Referring to the rupee, the Minister said, "by and large stabilised. But in

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