- Weather
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Max |
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40°C |
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Min |
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30°C |
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Sunrise |
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05 : 30 AM |
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Sunset |
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06 : 30 PM |
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Humidity |
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50 to 80 per cent |
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- Prayer Time
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Fajar |
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04:02 am |
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Dhuhr |
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12:08 pm |
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Asar |
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03:31 pm |
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Magrib |
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06:46 pm |
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Isha |
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08:04 pm |
- Oil Price
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Price in RO
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24ct / gm |
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17.99 |
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22ct / gm |
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17.55 |
- Currency Rates
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Forex Rates vs R01
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US Dollar |
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2.59 |
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Euro |
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2.02 |
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Pound |
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1.71 |
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Indian Rs. |
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142.40 |
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Pak Rs. |
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255.91 |
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Bangla Taka |
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201.79 |
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New Delhi: India's finance minister said the nation may ease restrictions on foreign direct investment (FDI) and called on the central bank to cut interest rates, as he extends efforts to revive growth in Asia's third largest economy.
"Many caps can be removed or certainly relaxed," and a review of the limits has begun, P. Chidambaram, 67, said in a March 15 interview in New Delhi.
A narrower budget deficit has created space for a rate cut, he said before the central bank's policy decision today. He also said Indian companies seem 'quite happy' with the rupee at its current level of 54 to 55 per dollar.
The review may herald a sweeping relaxation of the investment caps in about two dozen industries ranging from telecommunications to banking, which would be India's biggest opening to overseas companies since the 1990s.
Chidambaram estimates the country's economy may need more than $75 billion of foreign capital this year and next to fund a record current- account gap, adding pressure to relax rules.
Ten-year government bonds rose after the minister's comments signalling he sees room for lower rates. The yield on the 8.15 per cent note due June 2022 traded at 7.85 per cent in Mumbai from 7.86 per cent on March 15, according to the central bank's trading system. Three-month non-deliverable rupee forwards weakened to 55.24 a dollar after the comments on the currency, according to data.
Completely irrelevant
"Some of these caps are completely irrelevant in terms of the changed situation," said the finance minister. "We need to clear some of the cobwebs accumulated in India and go out and woo specific business houses."
Chidambaram has helped to spearhead policy changes to revive a faltering economy.
The government since mid-September has permitted more foreign investment in retail and aviation, cut levies on overseas borrowing, curbed fuel subsidies and set up a panel to speed up stalled road, rail and port projects.
"This creates transparency on what is being done and shows that the government is not only serious on continuing with the reforms but also implementing them," said Leif Eskesen, chief India and Southeast Asia economist for HSBC in Singapore. "It is important to demonstrate the determination and willingness to move forward on these policies."
Exporters happy
The rupee has appreciated 2.1 per cent versus the dollar since the changes began on September 13, to 54.29 per dollar in Mumbai. It remains down 7.6 per cent in the past 12 months, a period when the Sensitive Index climbed 10.4 per cent. The finance minister said he's trying to identify which of the world's largest 500 companies have yet to invest in India.
He visited Europe, Singapore and Hong Kong earlier in 2013 to court capital inflows. "We are looking at it in a very focused manner," he said in the interview. He added that ways to attract portfolio inflows of a 'longer tenure' are being considered. Foreign-direct investment fell 34 per cent to $22.8 billion in 2012, according to government data.
Record deficit
The deficit in the current account, the broadest measure of trade, widened to an unprecedented $22.3 billion in the quarter ended September 30, or 5.4 per cent of gross domestic product.
Chidambaram in the February 28 budget narrowed the fiscal gap to 5.2 per cent of GDP in the year to March 31, 2013, seeking to avert a credit-rating downgrade and reduce inflation risks. Consumer prices are rising almost 11 per cent, and inflation continues to be "a worry," Chidambaram said.
He set a budget-deficit goal of 4.8 per cent of GDP for 2013-2014, relying on higher tax revenue and asset sales to help pay for increased welfare spending before polls due by 2014.
The plan is credible and the threat of Asia's No. 3 economy losing its investment-grade status has "clearly receded by quite a few yards," the finance minister said. The Reserve Bank of India should 'take comfort' from the effort to contain the deficit, he said. "We have argued on the government's side that there is a case for lowering the policy rates," he said. "We express our view but the governor has to take the call."
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