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“The green shoots that are visible here and there, will multiply and the economy will revive. There will be an upturn in the second half of this year and it is quite possible that the estimates made by the Reserve Bank or the PMEAC or the government of growth between 5-5.5 per cent will be realised” said the finance minister.
Chidambaram was addressing a gathering of top bankers and economists in the Indian capital on Friday.
The delay in the US Federal Reserve’s tapering of its stimulus programme has helped reduce funding risks in the near term in India, according to a new Morgan Stanley Research report.
“Externally, the Fed’s decision to defer the taper of QE [quantitative easing] and the resulting pullback in US 10-year bond yields helped reduce the pressure on real rates and FX [foreign exchange],” the report said.
“Internally, measures to improve the current account deficit via quantitative controls on gold imports and measures to augment capital inflows through NRI [non-resident Indian] deposits have helped to reduce near-term external funding concerns,” said the report released at the Morgan Stanley annual Singapore conference.
The Indian finance minister said on Friday that bankers need to support those who are reeling under the impact of the economic slowdown.
Meanwhile, the Indian Central Bank Governor, Raghuram Rajan promised that he would not roll back the special dollar swap window for oil companies in a hurry.
Rajan said a majority of India’s oil demand has been met through the markets for almost a month.
“There is no fundamental reason for volatility in the value of the rupee,” said the governor on Wednesday.
The rupee closed stronger at 63.11 against the dollar on Thursday.