Market watch | FM: London station
Mr Chidambaram says he is aware of the demand slowdown in sectors like automobiles and housing but that will not stall the growth juggernaut, writes Udayan Mukherjee.india Updated: Jun 28, 2007 02:01 IST
Day 1 of the India Investment Forum in London was buzzing. Finance Minister P Chidambaram charmed global investors and I managed to sneak in a half hour with him. Was truly looking forward to this chat as much water had passed under the bridge, economically speaking, in the last four months. It was good then to see the FM relaxed and confident. In fact, he was planning to head to Wimbledon after our interaction.
The first thing he said was that we are still on track for near 9 per cent growth this year. That is reassuring, coming as it does after an inflation scare and fairly sharp monetary tightening. Mr Chidambaram says he is aware of the demand slowdown in sectors like automobiles and housing but that will not stall the growth juggernaut. He bristled a bit when I quizzed him about his interference into sectors like cement but eventually surprised me by saying that there is no price freeze in the sector and that he will not intervene if they raise prices, as they indeed have in the last fortnight. No, the government will not back off completely and continues to put pressure on the margin but direct intervention is ruled out. The markets should be happy if this statement can be taken at face value. He also promised that the government would do more, if required, for the beleaguered sugar manufacturers. Hopefully, it will not stop at increasing the buffer stock. Politicians have a habit of saying nothing while saying a lot of things; it was good to get a couple of tangible commitments out of the minister.
The FM is also keenly aware that the world is watching him as we head towards the next general elections. Several global investors have wondered aloud whether reforms and policy action will take a backseat in the interim as populism and political expediency take precedence. Mr Chidambaram says he will prove the sceptics wrong. While foreign direct investment in retail and insurance may not be easy to push through, he will more than make up in other areas of reform, he promises. Our finance minister is a very articulate man, one hopes he can walk the talk and truly deliver the goods. The proof of the pudding, as they say, is in the eating.
(The writer is Executive Editor, CNBC-TV 18)