FM cautions against inflows

Volatility in capital markets, slowdown in FDI inflow, trade imbalances, high current account deficit and the European crisis continue to be a cause for concern even as the economy show strong signs of recovery, finance minister Pranab Mukherjee said on Thursday.

Volatility in capital markets, slowdown in foreign direct investment (FDI) inflow, trade imbalances, high current account deficit and the European crisis continue to be a cause for concern even as the economy show strong signs of recovery, finance minister Pranab Mukherjee said on Thursday.

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FDI inflows declined 28% in the first half of the current fiscal year to $11 billion.

Addressing the Parliamentary Consultative Committee on Thursday, Mukherjee said the economic recovery has been broadbased with sectors such as agriculture, industry, manufacturing and services contributing to the growth. The economy has become resilient to both external and domestic shocks, he said.

Mukherjee also underlined the need to improve the public distribution system. "With normal rainfall, kharif production is now expected to rise by over 10% year-on-year for food grains and even higher for cash crops such as cotton and sugarcane."