FM pitches for more investments to attain higher growth
New Delhi: Finance Minister P Chidambaram on Thursday made a strong case to encourage foreign and domestic investment to boost growth and said PSUs alone are expected to pump in Rs 1.33 lakh crore in the current financial year.
"Investment must revive in this country...The economy has stabilised. The investment cycle has to start again. Both domestic investment and foreign investment must be encouraged. That will lead us to high growth," he said while addressing the media at the AICC headquarters.
The minister said the capital expenditure plan of 23 public sector undertakings, including Oil & Natural Gas Corp, Oil India Ltd, Indian Oil Corp and NTPC, will go up to Rs 1.33 lakh crore from Rs 1.25 lakh crore in 2013-14.
He said the capital requirement of banks in 2014-15 is estimated at Rs 45,528 crore, as against Rs 14,000 crore in the previous financial year. In the interim budget, the government proposed to infuse Rs 11,200 crore in public sector banks.
Chidambaram said foreign direct investment inflows in 2013-14 would exceed USD 27 billion. The inflows were USD 26.95 billion in 2012-13 and as per the latest estimate, it was USD 26.9 billion during April-February.
The Finance Minister said inflation is being driven mainly by food items and the open market sale of food grains is a way of cooling prices.
While keeping inflation under check, Chidambaram said the central bank should keep in mind the need to spur growth.
He expressed confidence that the Reserve Bank of India would keep this in mind while deciding on monetary policy initiatives.
Asked about reports that the RBI Governor may be changed if the BJP-led alliance comes to power, Chidambaram said Raghuram Rajan has outstanding credentials and the new government must respect the appointment.
India's economic growth rate, which slipped to a decade low of 4.5 percent in 2012-13, is estimated to inch up to 4.9 percent in 2013-14. It is projected to increase to 5.5 percent in the current financial year.
To a query regarding the international arbitration notice served by British telecom giant Vodafone over the Rs 20,000 crore tax dispute, Chidambaram said the government will contest the notice.
"I have already proposed to the cabinet that since they have gone back and issued arbitration notice, the original offer of non-binding conciliation stands withdrawn. That offer is no longer valid," he said, adding the government will defend its case during the arbitration.
The Cabinet had in June 2013 approved a Finance Ministry proposal to go in for conciliation with Vodafone to resolve the capital gains tax dispute related to its 2007 acquisition of assets in India from Hong Kong-based Hutchison Whampoa.
Replying to a question on the exchange rate, Chidambaram said, "We think that rupee at about 60 to a dollar, given the REER (real effective exchange rate), is more or less an accurate reflection of the true value of the currency."
Asked about the arrest of Financial Technologies India Ltd (FTIL) Chairman Jignesh Shah, Chidambaram said it was the decision of the investigating agency.
"The government has no say in the matter," he added.
The arrest came seven months after an FIR was registered by the Economic Offences Wing of the Mumbai police against Shah, promoter-director of the National Spot Exchange Ltd, and others on charges of cheating, forgery, breach of trust and criminal conspiracy to make quick profit.
The minister said Multi Commodity Exchange of India and MCX Stock Exchange, which had been set up by FTIL, are under the "careful" watch of regulators Forward Markets Commission and the Securities and Exchange Board of India, respectively.
"The government does not directly supervise and regulate them. It is done through the statutory regulators," he said.
Responding to comments by HDFC Chairman Deepak Parekh on part of the subsidies of 2013-14 being rolled over to the current financial year, Chidambaram said they are paid at the end of every quarter.
Accordingly, the fourth-quarter subsidy of the previous year is paid in the first quarter of the current year.
"This is well known in the government and I am sure this is known to Parekh...I hope he will not accuse us of any kind of financial jugglery," Chidambaram said.