New Delhi, May 30 : Expressing serious concern over the inflation rate (pegged at 8.1 percent on Friday), Chidambaram said today that it was crude oil driven, and this was posing a serious challenge to entire world to first contain it and subsequently take it to moderation.
He further pointed out that fiscal monetary and administrative measures already taken by the government will yield intended results to contain and thereafter moderate the inflation, provided prices of crude oil and other products do not further go up.
Chidambaram called upon Indian Incorporated to observe extreme patience and not to rise the prices of cement, steel etc. as the situation calls for so that panic does not take place. The Finance Minister also said that Indian economy would finally be emerge as an open economy, despite some administrative steps have been taken which would appear to be taking India to price control regime which would never be a fact.
He also announced that the Government will shortly lift the ban on External Commercial Borrowings (ECBs) that was imposed in August 2007 as the Finance Ministry and the Reserve Bank of India (RBI) are in consultation process for the job
Delivering his keynote address at an ASSOCHAM organized interactive session here, Chidambaram also said that the GDP growth for fiscal 2008-09 would stay at nine percent and can slip maximum to about 8.5 percent.
Chidambaram, however, proposed to work together with apex chamber of commerce and industry to find out the reasons as to why the manufacturing growth slipped to 8.8 percent in fiscal 2007-08 after recording a double digit growth rate in fiscal 2004-05, 2005-06 and 2006-07. his, according to him should not have happen when it is being claimed that investment intentions of Indian Inc. and their counterparts abroad are intact in view of bullishness and buoyancy that the Indian economy has recorded in the year 2007-08.
Elaborating on the ban imposed on ECBs in August 2007 by his ministry, he said that it was a temporary measure as the situation and economic circumstance called for such a ban which now would be lifted shortly as things have improved particularly the savings GDP ratio has gone up to about 37.5 percent percent which use to be less than 30 percent as per capita rate of Indian masses has been growing @ 7.8 percent.
He explained that just as the government banned a few weeks ago banned certain exports and imposed export duties as temporary measure to hold rising prices, in August 2007 in the same spirit the ban on ECBs was imposed which would now be lifted any day.
"If Indian economy can record a growth rate of nine percent at terminal year like that of 2007-08, there is no reason that this growth momentum cannot be maintained in the current fiscal. As a matter of fact, if the year 2007-08 has been a benign year, the GDP growth would have been not less than ten percent. I am reasonable sure that when India can record a growth rate of nine percent in just past by fiscal, even if prevailing economic uncertainties and slowdown persist, the GDP growth for fiscal 2008-09 will not be lesser than 8.5 percent," he said.
Venugopal N. Dhoot, ASSOCHAM President said that Indian economy would register a growth of 8.5 percent consistently for next few years despite uncertainties and slowdown as Indian economy has acquired that resilience.
President Elect of ASSOCHAM Sajjan Jindal assured Chidambaram that as far as the steel industry is concerned, it will keep its commitment for holding the prices but expressed unwillingness to keep on holding the price for too long as export duty on steel is a harsh and painful measure taken by the government.