Union finance minister P Chidambaram on Friday admitted that inflation and reviving investments remained a concern for the country’s sluggish economy but claimed that steps taken in the past few months are beginning to yield results.
Chidambaram’s comments came in the backdrop of the stock market zooming to new heights a day ahead of Diwali, with the benchmark BSE index reaching as high as 21,293.88 points.
“In recent weeks, we see signs that steps and measures we have taken are beginning to yield results. But there are still some challenges -- inflation and reviving investment,” Chidambaram said here.
Referring to the buoyancy in the stock market, Chidamabaram said that the “investor confidence is high. The markets seem to be happy but I would caution investors against excessive exuberance.”
The finance minister said that foreign direct investment (FDI) till August stood at $13 billion but added that fund inflows from foreign institutional investors (FIIs) tapered off in July-August after positive showing earlier in the year. He, however, expressed hoped that FII inflows would turn positive.
He also expressed confidence that the current account deficit (CAD) -- the gap between dollar inflow and outflow -- will be contained $ 60 billion dollars. “The current account deficit is well under control,” he said.
He attributed the signs of recovery to strong showing in core sectors.
Citing the robust monsoon this year, Chidamabaram said this would be a bumper harvest year.
He also asked the industry not to sit on cash “any longer, but start investing. New investment proposals will receive full support of the government”.
“Issues relating to 99 projects have been resolved with a total investment of Rs. 3.67 lakh crore,” he added.