The scandal-tainted Congress-led government of Prime Minister Manmohan Singh is desperate to tame inflation and revive the economy as it seeks a third term in office after national elections due by May.
“Efforts to contain current account deficit have yielded splendid results. The CAD will be around $50 billion this fiscal,” Chidambaram said.
Wholesale Price Inflation — the most widely watched price barometer — fell to 6.16% in December from a year earlier, down sharply from 7.52% the previous month.
The decline surprised analysts who had forecast around 7%.
“Growth can be secured on strong financial foundation, remaining within prudent fiscal limits, Chidambaram added.
He also said India remained the second fastest growing economy in the world and the slowdown in the economy only reflected the global trends.
“As international economy recovers, demand for oil will rise, he added.