Asserting that India can absorb $50 billion foreign investment annually, finance minister P Chidambaram has said the downturn in Indian economy was temporary and growth will return to 8% in two years.
Acknowledging the largeness of the current account deficit (CAD) at around 5% of GDP in 2012-13, he said the government had no timelines or targets in mind for bringing it down. He expressed hope that softening of oil prices will help bring down CAD.
Addressing the international media in New York, Chidambaram said the government was reviewing sectoral FDI caps as many of them were imposed at different points of time. "India is poised for a potential growth rate of 8% and the country has not fixed the limit to foreign investments," he said.
"We as a country can easily absorb $50 billion investments a year or more. In the hierarchy of foreign inflows FDI ranks first followed by FII and external commercial borrowings. FDI is important to India too as in any other country," he said.
Chidambaram, who met investors in Canada and US this week, said Indian downturn was a temporary phenomenon. "I agree that it's a legitimate question but we have an answer.
Between 2004 and 2012 we had a growth rate of 8% for six years and four years witnessed a growth rate of 9%.
"We will be back to 6% in the current year. The fact that the growth in 2012-13 declined it's not permanent and all the estimates show good upturn," he said.