Govt is doing the right things to overcome this period of stress: FM

Bangalore: Asserting that the government hasthe capacity to overcome “this period of stress”, UnionFinance Minister Chidambaram today said the current accountdeficit will be contained below $70 billion this fiscal.

“Last year I was told by pundits, analysts and ratingagencies and all the wise people who appear on televisionsevery day that we cannot contain the fiscal deficit. “I’m happy that we were able to surprise them; ….We aretold that the government cannot contain the current accountdeficit, I said last year we had the deficit of $ 88billion, this year I’m betting at $70 billion, and I willcontain it below $70 billion,” he said at a State Bank ofMysore event here.

“Let me tell you, I will surprise them once again, wewill contain it below $70 billion. I say this because wehave intellectual capacity among our senior economists andadministrators, we have the institutional capacity and aboveall we have our people who give us the confidence to overcomestress,” he said.

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Stating that “Our people save and that is a biggest assetto us”, Chidambaram said, “people of India save like no otherpeople anywhere in the world, in worst of times our savingsratio did not go below 30 percent.”

“If those savings are channelised into productiveinvestment and if we create a climate where people can takerisk, I have no doubt in my mind that we will be able to getover this period of stress.”

Asking people to be confident, he said “this year ourgrowth will be better than last year, and next year we shouldmove to a growth close to between 6-7 per cent and in the yearafter that we must discover our true potential growth rate of8 percent.”

Answering a question about his confidence in controllingthe CAD, he said “The confidence comes from my knowledge ofthe numbers, from the fact that gold imports have sharplycompressed in the month of July, August and September, exportshave picked up briskly and smartly.”

“Only yesterday the Governor (of RBI) said he has got USD5.6 billion of FCNRB accounts, so I’m confident and I want youto share my confidence,” he added

While stating that people were facing the burden of highprices, Chidambaram said, “We don’t fix the price of crudeoil, it is fixed by someone else- we have to import most of itas per requirement. There is also burden of inflation- asinternational commodity price rise…”… There could be inflation, I know you bear burdens,but even while you bear the burdens I want you to reflect thatcertainly India today is much larger economy than what it was10 years ago, what it was in 1991.”

“….We don’t make these crises, these crises are madeelsewhere. We have to deal with the consequences of thiscrisis,” he said.

He said the country has dealt with it in the past andthat the situation today is no worse than what it was in 1991or 1997 or 2008.

“We will get through this period of stress by emphasisingon the fundamentals of the economy and doing the basic rightthings.”

“We have to take the steps one by one- contain inflation,provide credit to sectors that require credit, unblock thestalled projects- get them growing, see to it that investmenttakes place, production and supply increase to meet thedemand, and bring more and more people into the system,” hesaid.

The Finance Minister also asked the banks not to be aclone of another bank. “We don’t want clones, each bank musthave its own culture, its own philosophy and should servepeople in its own way.”

“Reserve Bank will shortly issue licences to few morebanks. I’m happy that the Governor has spoken aboutdifferentiated banks. We don’t want more clones- we want eachone of them to cater to the needs of special group ofcustomers who don’t have banking today,” he said.

Chidambaram said there would there be competition,efficiency and progress if people attempt different things anddo things differently.

Stating that the poor in India are bankable, honestand good borrowers, the Finance Minister said, “I’m happy tosay in comparison to the rich, the poorer India repay loansmuch better.” “I would urge banks to shift the focus towardspoor and the middle class, so that corporates are forced to goto the market- that is where they should go.”

PTI