India needs more reforms to tide over the current economic crisis, finance minister P Chidambaram told the Lok Sabha on Tuesday.
Replying to a debate on the economy, he said: “India cannot afford to grow at less than 8% per year and needs more reforms to revive growth. We need less restrictions and a more open economy.” But, he added, there is no consensus on reforms among political parties.
Chidambaram, who spoke on the economy in the Rajya Sabha, at a press conference and in the Lok Sabha, said: “We will go through some pain to contain fiscal and current account deficits. But India can finance the CAD.”
On the rupee, which has lost 20% against the dollar since May and hit yet another all-time low of 66.30 on Tuesday, he said: “The currencies of all emerging economies have come under pressure… We have to be patient, we have to be firm, we have to be clear headed... in order to strengthen the fundamentals of the economy… I am confident that the rupee will find its true appropriate level.”
“It (Cabinet Committee on Investment) cleared projects with a total outlay of Rs 1.83 lakh crore ... the message we are sending is that we are very keen to get investment cycle restarted. The cycle has started and we are pushing it further,” the finance minister added.
The current economic situation is partly due to the stimulus that the government provided to industry in 2008 to tide over the global financial crisis.
“It (fiscal stimulus) brought us growth, it stabilised the economy, and we staved off the very serious consequences of the 2008 collapse of the US economy.
But it cost us in terms of fiscal deficit and current account deficit,” he said, adding that steps have already been taken to curb fiscal and current account deficits and the country is now on path of fiscal consolidation.
“Fiscal deficit of 4.8% of GDP and the absolute number indicated in the budget is a red line and the red line will not be breached... We have provided enough money for the cost of the food security programme for the remainder of the current fiscal,” he added.