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Public sector companies, “most of whom have strong balance-sheets” will be asked to raise funds overseas via quasi-sovereign bonds, said Finance Minister Palaniappan Chidambaram.
In an interview to Indian business daily The Economic Times, the finance minister said US Federal Reserve Chief Ben Bernanke’s statements have added to the “confusion” for which emerging markets have paid heavily.
“With so many ifs and buts, Mr Bernanke need not have made that statement [on ending quantitative easing]. And since then, he has attempted to clarify it several times. But I am afraid, it has only added to the confusion,” Chidambaram said.
“In any event, a number of emerging economies have paid a price, including India. Other ministers from Brazil, Mexico, Chile, Turkey, and South Africa have all shared my unhappiness over the developments,” he added.
The finance minister also said in a press conference on Wednesday that India will not breach the red line of fiscal deficit pegged at 4.8 per cent.
“We expect that we will be able to fully finance the CAD this year too, and we will not be obliged to draw down on reserves. This year, I promise we will tackle both [fiscal and revenue] deficits.
“The target for fiscal deficit is 4.8 per cent of gross domestic product. It is a red line, and it will not be breached under any circumstances,” he said on Wednesday.
Chidambaram tried to calm business sentiment by assuring growth of no less than 5.5 per cent.
“I am confident that we will take the Indian economy one rung higher in 2013-14. We are looking forward to a growth rate between 5.5-6 per cent, and we will take all measures to achieve that goal,” he said.
New investment in the country’s manufacturing sector is virtually on hold, with half of the companies indicating that they have no plans for major investments in the fiscal year 2013-14, says a recent survey by PwC and indian industrial body FICCI titled — “India Manufacturing Barometer”.
Chidambaram on Wednesday asked the industry to place trust in investments in India.
“Industrial houses appear to be confident when they decide to invest abroad. The same confidence must be exhibited in order to invest in India. The price of credit is indeed high, but it is not so dauntingly high that it should hold back investment,” he said.
He also asserted that he would try to check volatility and end speculative trades in the domestic currency.
With inputs from Agencies