That familiar government refrain: Don't worry, stay happy, says Chidambaram

Last Updated: Thu, Aug 22, 2013 12:36 hrs

India's economic growth remained flat in the first quarter of the fiscal year ending in March, 2014, but it is likely to pick up in the remaining three quarters, Finance Minister P Chidambaram said on Thursday.

"We are in better health than many other countries in the world," he told a news conference. "Therefore there is no reason for excessive or unwarranted pessimism."

Chidambaram said recent measures taken by the Reserve Bank of India were aimed at reducing volatility in the financial market, where the rupee has dropped to record lows.

He added that the government had no intention of introducing capital controls to halt a continued fall of the rupee. 
The silver lining ahead Chidambaram said was his expectation that growth will pick up in the second quarter or... the fourth quarter.
FDI inflows in the first quarter were at $9.4 billion, he stated.
Chidambaram reiterated that the Indian economy is currently challenged due to local and global factors.
However, he said, "we have taken many measures to revive investment and growth and they were committed to reduce fiscal deficit, and the Current Account Deficit will be met".
He said, increasing coal production was a part of their structural plan.

However, increasing duty on luxury items was not a priority.
Chidambaram added that, reducing bond yields would be considered in the RBI policy.

He further said that the government will infuse Rs 14000 crore in PSUs in 2014.

Meanwhile, the Reserve Bank of India (RBI) said in a report that India's inflation could accelerate in the current fiscal year due to the rupee's sharp depreciation.

The Indian rupee touched record low of 65.52/dollar on Thursday and is down 16 percent so far this year despite efforts by policymakers to prop it up.

"The pass-through of the depreciation of the rupee exchange rate by about 11 percent in the four months of 2013-14 is incomplete and will put upward pressure as it continues to feed through to domestic prices," the RBI said in its annual report for the 2012-13 fiscal year ending last March.

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