The Indian Finance Minister P Chidambaram with his team of bureaucrats hosted a dinner in the capital for the country's economic editors. Here is a transcript of CNBC-TV18’s Executive Editor Shereen Bhan’s comments on what the Finance Minister is hinting at vis-à-vis the economy and the way forward.
The Finance Minister said the economy will grow 7–8%. He added that the Indian economy is not insulated from global volatility and that rates cuts are a possibility if inflation falls further. The government, he said, is unlikely to meet the Fiscal Responsibility and Budget Management (FRBM) target.
Chidambaram added there will be no impact of the global financial crisis on India's GDP which is to grow between 7–8%. He, however, sees a slowdown in export-oriented manufacturing sectors, gems and jewellery, handicrafts and textiles. He also sees a slowdown in service remittances which account to about 45– 50% of India's GDP. He said global commodity prices are on a downward trend. He feels inflation will go down further and that might encourage a stimulus from the RBI in terms of further monetary action. He also hinted that interest rates may go down further.
However, the Finance Minister did not clarify whether there will be new infrastructure projects with additional expenditure. He said the government will introduce a bill in the Parliament to give aviation turbine fuel (ATF) 'declared goods' status. This will bring down the central sales tax (CST) rate on ATF to about 4% and this would be a huge relief to cash strapped airline companies. He said that benefits might be passed on to ultimate consumers.
Source : Moneycontrol.com