As concerns are expressed in various quarters on the fluctuating value of Indian Rupee against the US’s Dollar and the slowdown of industrial production/growth rate, a confident Finance Minister P. Chidambaram stressed in Lok Sabha on Thursday that the country will bounce back from the present economic stress.
“Rupee will correct itself” due to various measures of correction taken by the government, he said.
Replying to the debate on the supplementary demands for grants (general) for 2013-14 and the Appropriation Bill, 2013, he said: “Yes, the economy is going through a period of stress now. The growth has declined. The first quarter’s growth has been disappointing although given the trends and given the developments in the first few months of this year, we expected that growth will decline…”
“…we are concerned about the decline in growth last year and I am especially concerned about the decline in growth in the first quarter of this year but I do not think we should give room to gloom and pessimism. These ups and downs will happen in the life of a country. We will bounce back”.
On the fluctuating value of Rupee, Mr. Chidambaram said the Indian currency had come under pressure. “But as the new (RBI) Governor said yesterday and I said last week, we think that it is over shot to its value. We think correction will take place. A number of measures are being taken in order to strengthen, restore and improve confidence in the Indian economy.…”
Some of the corrections, as the Prime Minister said, were needed corrections. “But we think that the correction is an over correction and this is mainly because of the pressure to which all large emerging market economies have come. But the negative correction that is taking place to our adverse interest is not necessarily a correction that will not re-correct itself. That is why I am giving numbers to show, while the Rupee has depreciated in the past, it had also appreciated back”.
The government was confident that this correction would be stabilised and the Rupee correct itself. The Rupee had to find its value in the market depending upon macro factors like fiscal deficit, the current account deficit and inflation. “If we address these fundamental macro economic factors, the Rupee will correct itself”.
Mr. Chidambaram said though the Central Statistical Organisation (CSO) had reported a growth of five per cent in 2012-13, most of the States reported higher growth.
“Only two States reported State GDP growth of less than 5 per cent. All other States reported above 5 per cent...while States are reporting much higher growth rates, the CSO is reporting 5 per cent growth rate...looking at these numbers, we will try to find out where growth is happening and where is not happening and corrective measures will be taken,” he said.
He claimed that UPA-I delivered the highest growth in any five-year period in the history of independent India and the average growth rate in the first four years of UPA-II was more than the NDA's five year average of 5.9 per cent. He reiterated the fiscal deficit target of 4.8 per cent of the GDP for 2013-14 was a “red line and red line will not be crossed.”