Mumbai: The government is confident of meeting its fiscal deficit and current account deficit targets on the back of robust foreign direct investment flows and rising exports, a top Finance Ministry official said today.
"In the first quarter (of FY14), exports actually picked up and FDI inflows were very strong compared to the first quarter of last fiscal," Economic Affairs Secretary Arvind Mayaram said here after a meeting with bankers and overseas investors chaired by Finance Minister P Chidambaram.
There is no need to get excessively worried about funding the current account deficit (CAD), given the FDI inflows, he said.
Mayaram reiterated what Chidambaram said earlier this week on the red lines drawn around the fiscal deficit target of 4.8 per cent and current account gap goal of 3.7 per cent of GDP this fiscal.
"FDI inflows in Q1 have been at USD 9 billion, which is 70 per cent more than the same quarter last year. So, we think investment will begin to pick up and therefore one needs to continue to watch and see how we can get stability back on the rupee front," Mayaram said.
Admitting there could be some more outflows -- FIIs have pulled out over USD 12 billion since May 22 from the Indian markets -- Mayaram said this "is going to be more than compensated by strong capital inflows which will come, for instance, on FDI side as well as from the road-map which the Finance Minister has already shared."
Mayaram said there will be USD 11-12 billion of additional inflows this financial year.
The government on August 12 announced a slew of measures to attract inflows, including quasi-sovereign bond sales by public sector financial institutions. Asked about the timeline for this, the secretary said the institutions are working on a plan and according to that they will go into the market and raise about USD 4 billion.
On the interaction with overseas investors, worried about the return of capital control measures, high CAD and interest rate scenario, Mayaram said, "The meeting was basically to understand and address their concerns, if any. FIIs were assured how CAD will be maintained at 3.7 per cent and what reforms are taking place towards that goal."
First Published: Saturday, August 24, 2013, 23:02