New Delhi, Oct 8: Like the Finance Minister, Commerce and Industry Minister Kamal Nath also painted a positive picture of Indian economy; notwithstanding the global meltdown which has adversely impacted the Indian stock market and value of rupee.
Mr Kamal Nath on Wednesday, Oct 8 said at a media conference that the country will achieve its targets of exports and foreign direct investment this year and trade deficit will remain at the level of last year. India's trade deficit went up by 42.2 per cent to 49.13 billion dollars during April-August from 34.54 billion dollars in the same period last year. Federation of Indian Exports Organisation (FIEO) president Ganesh Gupta said trade deficit might cross 125 billion dollars by the fiscal-end, if the current trend continues.
The country exports for the April-August 2008 grew 35.1 per cent to 81.22 billion dollar, but increase of imports by 37.7 per cent to 130.36 billion dollars widened trade deficit.
Mr Nath said FDI inflows of 14.6 billion dollars during April-August was 124 per cent more than the comparable period a year-ago, adding ''we will achieve our FDI target this year''.
Assocham, however, assessed that FDI inflows could dip by 10 billion dollars to 25-26 billion dollars against target of 35 billion dollars due to global slowdown.
India could not meet its FDI target last year also when it received 25 billion dollars against the 30 billion dollar objective, set by the commerce ministry.
Finance Minister P Chidambaram has been maintaining that the country can achieve a growth rate of eight per cent this year and nine per cent next year, adding the global crisis will have only a marginal impact on India.
He said robust thing about FDI inflows is that manufacturing and construction sectors are its major recepients. Manufacturing has so far received five billion dollars, up 302 per cent from 1.2 billion dollars from the year-ago period of April-August, he added. Claiming that the country's economic fundamentals are sound, Mr Nath attributed this to convergence between financial system and economy unlike in the United States where fianancial system had been in an orbit of its own and was not in convergence with the country's economy.
Asked to explain the continuing slide in the stock market, he attributed it to "sentiments and frenzy", adding this is a transitory phase. In any case, the stock market will not have any major impact on the country because only 2.5 per cent of population has exposure to the capital market, he said.
Since there is not much exposure to the mortgage market either, Mr Nath said global crisis will have negligible impact on the national economy. He said stock market does not reflect "our strong economic fundamentals" and assured "there is no bubble (waiting to bust) in the Indian economy." On depreciating rupee having crossed the 48 mark against the US dollar, he said,'' Outflow of nine to ten billion dollars is the major reason for the rupee decline.