Economic reforms to continue: Chidambaram

PTI | ByReuters, New Delhi
May 25, 2004 03:54 AM IST

New Finance Minister said he would continue reforms to keep country's economy on a growth path.

New finance minister, Palaniappan Chidambaram, has said on Monday that he would continue reforms to keep Asia's third-largest economy on a growth path and that his government was committed to fiscal responsibility.

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He told reporters soon after taking office that the Indian economy was in a good shape as far as inflation and balance of payments were concerned.

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"I have reason to believe that the economy is in a resilient mode in terms of growth, inflation and balance of payments. There is great scope for consolidating the growth momentum in agriculture, manufacturing and employment," Chidambaram said.

The Indian economy is estimated to have grown more than eight per cent in the fiscal year through March 2004 as the best monsoon rains in a decade stoked a consumer spending boom.

The bespectacled, Harvard-educated Chidambaram whose appointment as the finance minister was cheered by financial markets, said fiscal consolidation would continue although efforts would be made to step up public investment.

The benchmark Bombay share index was up more than three per cent in afternoon trade as uncertainty on the future of economic reforms faded after Prime Minister Manmohan Singh named Chidambaram as his finance minister.

Singh heads a coalition government which needs the support of left-wing groups for a majority in parliament.

"I have worked with him (Singh) before when I was the commerce minister and he was finance minister," Chidambaram said. "It is a privilege to work as his finance minister.

He said the reforms, launched in 1991 by his Congress party and then carried on by other governments, would be continued with the benefit of experience gained over the past 13 years.

"It will be my endeavour to promote investment which I believe is the key to growth, jobs and to income," Chidambaram added. Agriculture, manufacturing and creating jobs required "massive investment", he said.

Analysts say the deficit -- which has hit five to six per cent of GDP in each of the past five years -- is holding India back economically and restricting the funds available to fight poverty.

The Government has forecast the deficit should fall to 4.8 per cent of GDP in the fiscal year to March 2004 and 4.4 per cent next year.

But taking into account borrowing by state governments, the deficit is closer to 10 per cent of GDP, leaving little money for health, education or infrastructure improvements in the world's second-most populous country.

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