New Delhi, May 30 (UNI) Finance Minister P Chidambaram today appealed to the industry to join in the government's efforts to rein in inflation by holding on to their price line and warned that government's efforts may be nullified if global crude oil prices move further northwards.
''Till sometime back, the World Bank and IMF time and again told me that global crude oil prices will not exceed 100 dollars a barrel. Today, no one is able to say that oil prices will not breach 200 dollars a barreel,'' Mr Chidambaram said in an interactive session organised by Assocham.
The Minister said business community has a chance to capitalise on a short-term price offer in view of the inflationary environment, but enjoined upon them not to do so.
He admitted that inflation put the government on its toes and added that these are difficult times.
Speaking about the GDP figures released in the morning by the CSO, Mr Chidambaram said nine per cent growth for fiscal 2007-08 was not a mean achievement and if a condusive policy environment is maintained and the international economic climate remains benign, then even a 10 per cent growth per annum would be realisable.
The Finance Minister said the nine per cent growth has been achieved when all markets have been tumultuous and the international global economic scenario bleak if these factors had not existed, the economy would have been able to clock a 10 per cent plus growth rate in 2007-08.
He said there were just 13 countries which recorded a growth rate of 10 per cent plus for 25 years.
India has missed this opportunity, but he expressed the hope that this would not be a case in future.
The 13 countries as a result of sustained high growth had moved over from developing countries to middle income countries, the Finance Minister said and added that India too would acquire the status of middle income country, if it sustains a 10 per cent growth for the next two decades and more.
Mr Chidambaram expressed concerns at the decline in manufacturing growth rate with the CSO putting this figure at 5.5 per cent in today's data.
He said corrective steps to be taken to catapult the growth rate of manufacturing to double digit. These measures would be adopted after meeting with apex chambers.
Mr Chidambaram said this magnitude of GDP growth has been possible because of high investment in GDP ratio which was of the order of 35 per cent.
High investment rate has been possible because of high savings rate on account of large savings by households, reduced dissavings by the governments and public sector enterprises and reasonable private corporate savings.
Mr Chidambaram said the productivity gains of the last few years need to be sustained and the industry must cash in on the declining capital-output ratio. ''It is necessary to build on these efficiency gains,'' he said.
The Finance Minister said the pace of prices in future will be determined by prices of crude oil. Nearly 200 years ago, the prices of commodities were decided by gold prices and immediately after the industrial revolution by the prices of steel.
Mr Chidambaram expressed the hope that good sense will prevail upon the international community not to take prices higher than the prevailing prices, as it will jeopardise the growth of the entire global economy.
UNI GS SBA VC2005