New Delhi, Nov 23: Finance Minister P Chidambaram today said the Indian economy was poised to register a growth rate of nine per cent this fiscal, even though the growth of exports could moderate. Mr Chidambaram exuded confidence that the monetary authorities would be able to master the art of management of large capital inflows maintaining price stability.
These remarks by the Finance Minister were made at an interactive session at a Conference organsied by the Confederation of Indian Industry (CII) here.
The downside risks to price stability and growth entail from the steep hike in global oil prices, commodities and food prices, he said.
''I am confident, we will gain mastery over that (management of capital flows),'' Mr Chidambaram said.
''Economic growth has averaged 8.6 per cent in the last four years. I am reasonably confident that 2007-08 will turn out a growth close to that average. It will be close to 9 per cent,'' Mr Chidambaram said.
The Finance Minister said India has exceeded the target of 10 billion dollars of FDI and will maintain the same growth rate for the current financial year.
''India will remain the second fastest growing economy after China for this year,'' he said.
Mr Chidambaram said the high inflows of FIIs in the captal market were a matter of concern for the government, Mr Chidambaram said.
In this regard he said his government was cautious in opening up the financial markets.
The Finance Minister was categorical that the government will be able to keep a check on price rise, notwithstanding the high global oil, commodity and food prices.
The Finance Minister made out a case for the rapid development of infrastructure sector, saying that India needs to invest 475 billion dollars in the next five years to sustain high growth.
Nearly, 130 billion dollars must come from Foreign Direct Investment in the sector, he said.
Export growth has fallen in recent months as the Rupee touched nearly a decade high. The appreciation in particular has hit textile exporters.
The Finance Minister said expansion of exports could drop further due to the subprime crisis in the United States and a possible slow down of that economy.
In April, India set a 28 per cent export growth target at 160 billion dollars for the year to March 2008. But growth stood at 18.5 per cent during April-September. Industry and Commerce Minister Kamal Nath is contemplating a revision of the annual target.
''There could be some moderation in the export demand in India,'' Mr Chidambaram quipped.
The US accounts for almost 40 per cent of India's exports.
Mr Chidambaram said inflation was now a matter of concern the world over with international oil prices touching 100 dollars a barrel.
''Oil prices have risen to new heights and there is a warning it will rise further. It is important to factor in price increase and adjust policies so that inflation is not fanned in India,'' Mr Chidambaram added.