Stepping up the government’s defence of an ailing rupee, finance minister P Chidambaram on Wednesday said the Centre will further liberalise its foreign direct investment (FDI) policy, and hinted at measures to check non-essential imports in a bid to tame a widening current account deficit (CAD).
“The government is actively considering significant liberalising of FDI policy, which would further increase long-term foreign investment,” he said.
While the rupee has been hovering around 60 to the US dollar, current account deficit or CAD touched a record 4.8% of GDP in 2012-13.
Marking the completion of one year after his return to the finance ministry, Chidambaram said the government was drawing up a chart of non-essential items on which import duty could be raised, in order to limit their inward shipments.
“Electronic hardware can be manufactured in states such as Rajasthan and Kerala,” he said.
The finance minister also hinted at other steps such as encouraging public sector undertakings to raise funds from overseas markets and norms for external commercial borrowing (ECB).
The government is also considering steps to attract investments from sovereign wealth and pension funds and float an NRI deposit scheme.
On a widening CAD, Chidam-baram said even without additional measures inflows would be well above $80 billion, sufficient to finance CAD.
The minister also expressed confidence that India will achieve a growth rate of 5.5%-6% in 2013-14. “I am confident that we will take the Indian economy one rung higher in 2013-14.”