Jaitley talks up economy ahead of possible Fed rate hike
Finance minister Arun Jaitley highlighted the resilience of Asia's third-largest economy on Thursday, as world markets brace for what could be the first increase in US interest rates since before the global financial crisis.business Updated: Sep 17, 2015 13:45 IST
Finance minister Arun Jaitley highlighted the resilience of Asia's third-largest economy on Thursday, as world markets brace for what could be the first increase in US interest rates since before the global financial crisis.
Jaitley outlined the government's growth-friendly reform agenda and promised, within days, to resolve tax disputes with investors that have blighted India's image as a place to do business.
"In a situation where there is turmoil almost by the day, as far as global markets are concerned, we are trying to make the fundamentals of our own economy sound," Jaitley said .
Two years ago, when Ben Bernanke, the then-chairman of the Federal Reserve, flagged the possibility that US' central bank's aggressive policies of monetary easing would need to be wound down at some point, Indian financial markets swooned.
The Fed was due to announce later on Thursday whether it would hike interest rates now, in a move that many in the financial community say would suck billions of dollars out of emerging markets.
Jayant Sinha, the minister of state for finance said the government was aiming for annual economic growth rates of 8% to 10% through a raft of supply-side measures to increase India's ability to grow and avoid a demand-driven boom and bust cycle.
Sinha said the government had also ramped up public investment by 40% this year, as part of Prime Minister Narendra Modi's drive to modernise roads and railways.
The government has been chafing for the Reserve Bank of India to cut interest rates to reduce the cost of borrowing and make it easier for businesses to invest, so that the government's pump priming can spark a broader investment-led recovery.
Inflation at 3.7% is well below the RBI's January 2016 target of 6%, prompting some analysts to predict another rate cut at the next policy review in late September.
However, a top central banker signaled caution even though the RBI's main policy rate, at 7.25%, is nearly double consumer price growth.