The Hindu Business Line : We will meet oil price challenge to rein in fiscal deficit: Chidambaram

THE Finance Minister, Mr P. Chidambaram, has expressed concern that the 12 per cent deficiency in the performance of the south-west monsoon and the continuing high oil prices could undermine the Government's efforts at controlling fiscal deficit in the current year.

He was responding to a question from a member of the media at the press conference here in London. He was, however, hopeful that oil prices would be moderated in the days to come.

In the long run, it would be necessary to accelerate the exploration programme within the country and put in place measures of energy conservation besides resorting to alternative sources of energy.

The Minister emphasised his Government's commitment to keeping the deficit situation under control by pointing out that it was the UPA Government which notified the Fiscal Responsibility and Management Act passed by the previous Government and thus committed itself to a statutory basis for keeping a check on Government's spending.

On foreign direct investment in the banking sector, he reiterated that foreign banks with operations in the country were satisfied with the latest Government's decision to permit an annual 10 per cent hike in ownership in a private bank which can be sustained till such time the local bank becomes a subsidiary of the overseas parent.

He recalled the interaction that he had with CEOs of Citibank and Standard Chartered Bank during his current visit and said they had had expressed satisfaction with the Government's latest policy initiative.

He was confident that in the interim, the process of consolidation of public sector banks too would have been completed thereby providing a vibrant financial sector in the country.

He expressed the hope that the Government's decision on a hike in FDI in the civil aviation sector from 40 to 49 per cent would be announced before the month-end.

The Finance Minister was here in London in connection with a roundtable of discussions with a large group of leading European investors and corporates with a view to furthering investments in India.

The discussions were organised by JM Morgan Stanley, one of India's investment banks and Morgan Stanley, the global financial services firm.