CAD will be well under $70 billion: Chidambaram

P. Chidambaram, Union Minister for Finance, at the inauguration of an event marking the 101 branches of State Bank of Mysore in Bangalore on Saturday. Photo: G.R.N. Somashekar

Union Finance Minister said on Saturday that he is confident the Current account Deficit would be “well under $70 billion” by the end of the current fiscal. Speaking at the inauguration of 101 branches of the State Bank of Mysore, to commemorate its centenary, Mr. Chidambaram said, “We need not be despondent about this period of stress.” Observing that “the people of India save like no other people in the world,” he said “channelising savings into investment would enable the country get through the crisis.”

Asked to explain the reasons for his confidence in taming the CAD, Mr. Chidambaram said his optimism arose from the fact that gold imports “compressed sharply” from 335 tonnes in the April-June 2013 quarter to about 65-70 tonnes in the July-September quarter. He also referred to the RBI Governor’s statement on Friday that accruals to the tune of $5.6 billion had been made into FCNR(B) accounts. The “brisk pick-up” of exports was another reason for his optimism, he said.

Asked if there would be an additional capital infusion in banks, in order to enable them to lend more, Mr. Chidamabaram said, “That depends on how much additional credit banks are able to provide to selected sectors at lower rates.’ The policy, he said, “is aimed at boosting demand.” The extent of additional capital would depend on the plans proposed by all the banks, he added.

He said the Government would ensure that both the commodity and equity exchanges of the MCX function without any “malfeasance or misfeasance.”

Asked if the recent Supreme court’s interim order restraining the Government from making Aadhaar mandatory for services, Mr. Chidambaram said he was confident that the Government’s “detailed affidavit” would satisfy the Court about “the larger public interest and pass an appropriate order.” He pointed out that about one crore LPG connections, of the 13-14 crore connections nationwide, are likely to be “duplicate accounts,” implying that the linkage with Aadhaar could result in savings running into several hundred crore rupees.