Washington, Sep 27 (UNI) Finance Minister P Chidambaram today hinted at further sops for exporters to compensate them for loss on account of the appreciating rupee, saying that the depreciation of the dollar value vis-a-vis the rupee has thrown up unexpected downside risks.
''We may find ourselves in a situation where we need to provide for the consequences of an appreciating currency,'' Mr Chidambaram said while addressing scholars at Peterson Institute for International Economics here.
He also said the ''outrageous'' global crude oil prices can not be fully passed to the consumers in India, but the burden will largely fall on the domestic budget and may constrain the investment capacity of Indian companies.
The price of crude oil is an enormous external risk, he added.
In the area of non-proliferation, he said, though India in not a signatory to the NPT, it has put "substance over form" while maintaining an impeccable record of non-proliferation. The India-United States agreement on civil nuclear cooperation is premised on that record.
Mr Chidambaram said India's GDP has grown at an average rate of 8.6 per cent a year over the last three years and foreign exchange reserves stand at over 230 billion dollars. All sectors of the economy are contributing to the growth rate, although the performance of the agriculture sector needs to be improved.
''The government has brought greater stability and clarity to the policy environment. In many cases, the policy is backed by law or regulation. In key sectors, the government has ceded authority to independent regulatory bodies,'' he said The Minister said while sustaining high growth is one kind of challenge, the more difficult challenge is spreading the benefits of growth and making it more inclusive.
Despite a marked reduction in poverty, about 26 per cent of the population lives in extreme poverty, he said.
''Our government believes that in a developing country growth is an imperative and nothing should be done to affect the process of growth. At the same time, our government believes that it is the duty of the government to provide a measure of economic and social security to the very poor who are, at present, beyond the pale of the market economy.'' He said the government has adopted an ambitious social and economic agenda that extends to areas such as guaranteed wage employment, affirmative action in education, death and disability insurance, health insurance, old age pension, scholarships and education loans, empowerment of women and the right to information.
Speaking about micro- credit, he said , India runs the largest programme on micro credit . At the end of March 2007, 2.6 million Self Help Groups - nearly all of them 'women only' groups - were credit-linked to the banks.
He said, it is growth that has allowed the Government to increase public expenditure in sectors such as health and education. In 2003-04, the Central government's budget had allocated Rs 70 billion for the health sector and Rs 70 billion for the education sector.
In 2007-08, those allocations had grown manifold to Rs 143 billion for health and Rs 286 billion for education.
''Our best chance lies in encouraging more openness and more competition. An open society and an open polity will eventually embrace an open economy. A revolutionary change has been wrought in the sectors where monopolies were dismantled and the sector was thrown open to competition.'' Mr Chidambaram said competition was driving growth in many other sectors-- steel, textiles, pharmaceuticals, automobiles, home appliances, packaged food, computer hardware and software, banking and insurance.
"It is axiomatic that more openness and more competition will benefit the sectors that remain closed or restricted as a matter of policy, and that is the direction in which we would like to move, " he added.
Mr Chidambaram said, foreign direct investment has become a two way street. In 2006-07, while foreign direct investment flows into India were 19.5 billion dollars, the outflow of capital amounted to 11.9 billion.
''Just as we are willing to share responsibility with the developed countries, the G-7 countries must also share responsibility with the emerging economies. That, indeed, would be the most wise and prudent course to make the world a better and safer place." UNI