Growth to pick up in 2013/14, room for more FDI: Chidambaram

TOKYO Mon Apr 1, 2013 5:19pm IST

1 of 2. Finance Minister Palaniappan Chidambaram (L) meets with Japan's Prime Minister Shinzo Abe at Abe's official residence in Tokyo April 1, 2013.

Credit: Reuters/Issei Kato

Related Topics

TOKYO (Reuters) - India's economy is capable of absorbing $50 billion in foreign direct investment per year, Finance Minister P. Chidambaram said on Monday, adding that the government is committed to reforms to tackle a large current account deficit.

Addressing a news conference during a visit to Tokyo promoting India as investment destination, Chidambaram also reiterated that growth in Asia's third-largest economy was expected to accelerate in the current fiscal year to March 2014.

"FDI flows into India are quite positive... think we can absorb, easily absorb $50 billion of FDI every year into India," said Chidambaram who is regarded as a market-friendly reformer.

India's financial account, which includes foreign direct investment, portfolio investment and overseas borrowing by Indian companies, showed a surplus of $31.1 billion in the December quarter for the fiscal year ended March 31.

The government is struggling to boost the economy, which has posted its weakest growth in a decade. Removing investment barriers, many of which date back to before India started opening up its economy in the early 1990s, has been key to the government's push to restoring investor confidence.

"A new trade policy will be announced in about three or four days and that will show that we are committed to reform," said the Harvard-educated former lawyer.

Chidambaram repeated his recent pledge that the government would simplify "outdated" foreign investment caps in a bid to attract more investors and tackle its large current account deficit, but stopped short of specifying which sectors he wants to reform.

The current account deficit widened to a record high 6.7 percent of GDP in the December quarter, driven by heavy oil and gold imports and muted exports, in a worse-than-expected performance that will keep the rupee currency under pressure.

The government has previously said it plans to open up the pensions sector to foreign investors, and raise the investment limit in the insurance sector to 49 percent from 26 percent.

"The current account deficit is indeed large and a matter of concern," said Chidambaram. "For 2012-13 (it) has been fully financed by foreign exchange inflows, without touching our foreign exchange reserves. In fact we may have even added to our foreign exchange reserves," he said.

Chidambaram also said that the Indian economy was expected to grow 6.1-6.7 percent in the current fiscal year, an improvement on the estimated 5.0-5.5 percent growth recorded last fiscal year, a figure the minister said he was not satisfied with.

(Reporting by Antoni Slodkowski; Editing by Michael Urquhart and Sanjeev Miglani)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage