This is in addition to RBI’s restrictions on gold imports by banks and other agencies.
Union Finance Minister P. Chidambaram, on Thursday, said that the government would be able to achieve the fiscal deficit target of 4.8 per cent during 2013-14, but falling value of the rupee and the widening current account deficit (CAD) were the major worries.
“We have been able to lower the fiscal deficit from 5.3 per cent to 4.9 per cent. This has been achieved through substantial fiscal tightening in the second-half of last year. In 2013-14, we will be able to achieve 4.8 per cent,” said Mr. Chidambaram, while addressing the annual general meeting of the Indian Banks’ Association (IBA) here. “We reach this by increasing revenue and monitoring the expenditure, without compressing expenditure,” Mr. Chidambaram added.
He said that investments would pick up in the remaining three quarters of the year. “In this quarter, we will review the projects which were stalled,” said Mr. Chidambaram. He mentioned that roads, coal, oil and gas and fertiliser would get immediate attention. He, however, expressed serious concern over the CAD, and blamed increasing gold imports for much of the problem. The Finance Minister asked banks not to promote sale of gold coins.
Referring to the current gross domestic product (GDP) growth, Mr. Chidambaram admitted that 5 per cent growth was low and was not acceptable. “We are not satisfied with the growth picture, but there is hope,” he added. The Finance Minister said it was a matter of relief that the wholesale price index-based inflation was falling and the consumer price index-based inflation was also showing moderation.
‘Transmit monetary policy’
He asked bankers to improve the profitability of banks. At the same time, he urged them to transmit monetary policy to its customers.
Mr. Chidambaram said Rs.5 lakh crore would be required in the form of capital infusion for banks. Out of this, Rs.3.25 lakh crore would be non-equity. He said a substantial portion of the equity capital should be financed through retained earnings, and, hence, called upon banks, particularly the public sector banks, to improve their profitability. He asked them to reduce their non-performing assets (NPAs).
DICCI SME Fund
The Finance Minister launched India’s first Securities and Exchange Board of India (SEBI)-registered social impact fund, DICCI SME Fund, here. The venture capital fund, initiated by the Dalit Indian Chamber of Commerce & Industry (DICCI), aims to raise Rs.500 crore over 10 years, and finance Dalit entrepreneurs to set up their businesses. The fund was launched with an initial contribution of Rs.10 crore by the Small Industries Development Bank of India (SIDBI).
Mr. Chidambaram also said that he would ask public sector financial institutions, banks and LIC to invest in the DICCI SME Fund.