A day after the cabinet unleashed a raft of decisions aimed at spurring growth, Finance Minister P. Chidambaram said the government will take more steps in the coming weeks to boost investor sentiments and revive the economy.
Addressing the Delhi Economics Conclave on “Reviving Growth”, here, Chidambaram said India weathered the 2008 world financial crisis very well. But the challenge facing the economy now was different from the one seen in 2008. The Department of Economic Affairs, the National Institute of Public Finance and Policy (NIPFP) and Confederation of Indian Industry jointly organised the conclave. With rapid globalisation, the external sector of the economy was becoming more vulnerable, Chidambaram said and cautioned that global developments may continue to have a huge impact on the Indian economy.
“The present challenge calls for bold and innovative measures,” he said. “And I am confident that the steps we have taken, and some more steps that we will take in the next few weeks, will help turn the Indian economy around.”
Chidambaram told the conclave that the “government has been making every effort to turn the economy around and encourage investments,” and hoped the various steps it has taken would show results.
The steps include setting up of Cabinet Committee on Investment to fast-track large project entailing investment of over Rs1,000 crore, the Land Acquisition Bill and new urea investment policy, besides the opening up multi-brand retail trade to foreign equity, “It is too early to say whether the measures have begun to bear fruit, although it is our expectation that they will do so,” Chidambaram said.
He said the government was addressing tax issues that had caused concerns among investors. India’s growth slowed to 5.3 per cent in the second quarter of the 2012-13 fiscal. The growth in 2011-12 had fallen to a nine-year low of 6.5 per cent. Chidambaram also asked Asian countries that are part of the G-20 to come together to increase the resource base of the Asian Development Bank (ADB). He said countries such as China, India, Japan, South Korea, Indonesia and Russia should enhance the resource base of the ADB so that it can play a greater role in infrastructure financing.
Gross savings as a share of gross domestic product has increased in a number of Asian countries, giving them more appetite to shore up the resources of multilateral institutions compared to the advanced economies beset by fiscal challenges.
Raghuram Rajan, chief economic adviser, said India was reaching the limits of stimulus and had been forced to contemplate ways to achieve sustainable growth.