the deficit but may even add to reserves.”
Rangarajan pointed out that over the next few years India needed to take the CAD to a more comfortable level of 2.5% of GDP. “The level of comfort is related to the capital flows that can come in without any extraordinary efforts,” he said.
Chidambaram said his personal view is that the rupee, which traded on Friday at 61.74 against the dollar, was slightly weaker than “appropriate exchange rate” although he hastened to add there was nothing called appropriate exchange rate. He expressed satisfaction that the rupee has stabilised.
The minister was also hopeful that the still high wholesale price-based inflation, 6.1% in September, will see moderation because of the good monsoon, the fiscal discipline of the government and the steps taken by the Reserve Bank of India. “What we can do, we will do in terms of the fiscal policy, what can be down through monetary policy, the RBI will do and what we can do with our food stocks, we will do,” he said.
Chidambaram said the bumper crop this year would boost agriculture GDP growth this year. Last month, the PMEAC projected 4.8% growth for agriculture in 2013-14, compared with just 1.9% last fiscal, thanks to good monsoon rains.
The economy grew just 4.4% in the quarter through June — the slowest quarterly expansion in four years — as manufacturing and mining contracted. Chidambaram pointed out that although manufacturing sector growth appeared poor, certain sectors such as automobiles showed higher exports in the first half. Passenger vehicles export grew 13.7% in the period. “If any sector needs any specific measures and if the department of industrial policy and promotion proposes, we will look into it,” he said.
“The RBI estimates GDP growth for 2013-14 at 5%, I have estimates from the PMEAC which expect GDP to grow at above 5%. I also have my economic division, which expects GDP growth at 5-5.5%," he said.
He also said that foreign investors have retained their confidence in the Indian economy. The government is resolved to extend full support to new investment proposals and that if anyone encounters any difficulty, it will be addressed, he said. Out of a total 344 stalled projects, the government has so far cleared 99 projects that entail a collective investment of Rs 3.67 lakh crore in the last six months. The 16.8% growth in gross bank credit also indicated that demand