The Hindu Business Line : `India will stick to own fiscal direction'

The Finance Minister, Mr P. Chidambaram, on Saturday made it clear that India will not change its fiscal correction directions based on the ratings of the International rating agencies, whether upwards or downwards.

"I take note of a rating agency's rating. But I don't allow myself to be pushed in one direction or other by the rating. In fact, it is with the below investment grade rating that we had for the last several years that we received a large amount of investment," he said, when asked to react to the reported advice of Standard & Poor to bring down the fiscal deficit of both Centre and States to below 8 per cent for better rating.

"Therefore, you take it for what it is and not as some kind of a judgment that requires you to be pushed in one direction or another. We are autonomously adhering to a path of fiscal correction. The States are also autonomously adopting a path of fiscal correction. This path will lead us to fiscal consolidation. And the states of fiscal consolidation will be decided by the Government of India and the Government of States autonomously. The ratings are welcome to make suggestions," Mr Chidambaram said.

Investing surpluses

Allaying apprehensions on investing Indian surpluses in other Asian economies, he told newspersons that, "If other Asian countries are solvent and financially sound markets, what is the difficulty in investing a good part of surpluses in Asian markets? To begin with, a half of surpluses could be invested."

Asian bond market

On the development of the Asian bond market, Mr Chidambaram said, "It is under discussion. We are engaged in the dialogue with other Asian countries and the ADB on the Asian bond market. But one of the conditions for that would be to develop our own corporate bond market in India. You are aware of the R.H. Patil Committee report, which has been accepted by the Government. We are now implementing that report. We need to develop our own corporate bond market. Simultaneously, we are engaged in a discussion of the Asian bond market. We look forward to progress in that direction."

Allays fears on FTA

Refuting possible adverse effects of the Pan Asia free trade agreements on the Indian industry, the Finance Minister said, "In fact, sooner or later, we have to come to terms with the fact that the world will move towards free trade. If and when the Doha Development Round reaches a successful conclusion, trade will become freer and trade barriers will become fewer. Indian industry has to cope with that. I am confident that a carefully planned FTA will bring positive results to both partner countries."

Further, he assured, that "the Indian industry will not be affected by such FTA, we will be very selective and careful and the terms and conditions will be very carefully negotiated."

Common Asian currency

The common Asian currency is not going to happen overnight, he said. "It is a long road. What is happening now is Asian+3 countries are holding discussions amongst themselves. We are neither happy nor unhappy that we are not part of the discussions. But over a period of time, if all the pre-conditions are met by the participating countries, it is possible that an Asian currency unit will emerge. It is at the end of a very long road. And surely at some stage, India's views will be taken into account."

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