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.

my view it is still a little over what I would consider the appropriate exchange. There is no such thing called appropriate exchange rate, but ...it is slightly over the appropriate exchange rate level".

The rupee, which dipped to a historic low of 68.85 to a dollar in late August, has improved significantly and today closed at 61.74 to a dollar.

To a question on retrospective tax issue, he said, amendments to the Income Tax Act would be introduced in Parliament only after the Rs 11,200 crore-Vodafone tax case was resolved.

The government has sought a non-binding conciliation with the British Telecom major Vodafone to resolve the tax issue ensuing retrospective amendment to the Income Tax Act in 2012.

"The question is how we move forward... Amendment (to the IT Act) has to be moved but I can move that amendment only after the Vodafone case is resolved", he said.

Chidambaram also defended the Reserve Bank's decision to raise the short-term lending (repo) rate by 0.50 per cent in two trances, saying it had to be viewed in the context of inflation and the depreciating rupee.

"The market seems to be very happy. More than anyone else the market seems to welcome the RBI and government measures... but I would caution investors against excessive exuberance", he said.

The benchmark BSE Sensex fell back after scaling a lifetime high on the last day of the Hindu Samvat year 2069 and still ended at a fresh closing record today with a 32-point gain amid continued foreign fund buying and renewed optimism about the economy.

The RBI had in its last two monetary policy reviews raised the short-term lending rates to contain high inflation. It had also reversed liquidity tightening measures including reducing the Marginal Standing Facility rate, which were undertaken to curb currency volatility.

Answering questions on the reluctance of some global multi-brand retail companies to enter India, Chidambaram said, "one or two multi-brand retailers will enter the market sooner than later".

Although the government had opened multi-brand retail for foreign investment last year, it has yet to receive any proposal from any global company.

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