Finance Minister P. Chidambaram has expressed confidence that the current account deficit will be capped at below $70 billion by the end of the fiscal.
“The current account deficit (CAD) at the moment is well managed. We will surprise the pundits, analysts and rating agencies at the end of this fiscal,” he said, after inaugurating 101 branches of the State Bank of Mysore here on Saturday.
“Last year, we had a deficit of $88 billion; this year I’m betting at $70 billion, and I will contain it below $70 billion,” he said.
“Let me tell you, I will surprise them once again, we will contain it below $70 billion for we have the intellectual capacity among our senior economists and administrators, we also have the institutional support,” he emphasised.
“The confidence in controlling CAD has come after restricting gold imports during the second quarter to 65-70 tonnes, compared with 335 tonnes during the first quarter. Also, exports have increased substantially and our FCNR account deposits have swelled to $5.6 billion,” he pointed out. On economic growth, he said: “Our target is to achieve 8 per cent (rate of growth). This needs better handling and should be done step-by-step. It cannot be done in one go.”
“This year, our growth will be better than last year (5.5 per cent) and next year, we should move to a growth close to between 6-7 per cent, and in the year after that, we must discover our true potential growth rate of 8 per cent.”
On Indians’ savings habit, Chidambaram said: “Our people save, and that is the biggest asset to us.This habit has bailed us out in many a crisis, be it the 1991, South East Asian currency crisis, 2008 financial sector collapse.”
New bank licences
Welcoming RBI Governor Raghuram Rajan’s stand on differentiated licences, Chidambaram said: “One bank should not be a clone of the other. It should create and maintain its own culture, idioms and philosophies. Each bank should strive to take a different path and address the needs of special groups or customers.”
“By taking different paths, banks will do differently and then they will competitive,” he added.