New Delhi, May 31: 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, according to the Finance Minister P Chidambaram.
Delivering his Keynote Address at an ASSOCHAM organized Interactive Session here on Friday, the Finance Minister also said that the GDP growth for fiscal 2008-09 would stay at 9 per cent and can slip maximum to about 8.5 per cent. 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 per cent in fiscal 2007-08 after recording a double digit growth rate in fiscal 2004-05, 2005-06 and 2006-07.
This, 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 ban imposed on ECBs in August 2007 by the Finance Ministry, the Finance Minister 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 per cent which use to be less than 30 per cent as per capita rate of Indian masses has been growing at the rate of 7.8 per cent.
He explained that just as the government, 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 9 per cent 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 10 per cent. I am reasonable sure that when India can record a growth rate of 9 per cent 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 per cent", said the Finance Minister.
Expressing serious concern over the inflation rate, the Finance Minister said that it is crude oil driven inflation which is posing a serious challenge to entire world to first contain it and subsequently take it to moderation. Chidambaram 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.
The Finance Minister called upon Indian Inc. 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.
In his welcome address, Venugopal N. Dhoot, ASSOCHAM President said that Indian economy would register a growth of 8.5 per cent consistently for next few years despite uncertainties and slowdown as Indian economy has acquired that resilience.
In his address, President Elect of ASSOCHAM, Sajjan Jindal assured the Finance Minister that as far as 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.