More reforms to spur growth soon: Chidambaram

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SME Times News Bureau | 13 Jun, 2013
The government will initiate a number of reforms such as lifting the cap on foreign direct investments in the coming weeks to spur growth, Finance Minister P. Chidambaram said Thursday.

"I expect a number of decisions in the next few days and weeks. In June, you can expect a number of decisions taken and implemented that will accelerate reforms and spur investments in critical sectors," Chidambaram said at a press conference in New Delhi.

Chidambaram said the reforms will include allowing foreign direct investments (FDI) in various sectors, including defence and skill development, and rationalisation of coal and gas prices.

The government is also likely to announce measures to ensure proper supply of coal to power plants.

The finance minister said economic reforms undertaken by the government in the last one year have started yielding results and they would have more positive impact in the coming months.

"I think significant results have been achieved in the last nine months and I am looking forward to more reforms," he said.

Stressing that economic reforms were not a one-day game, Chidambaram asked investors to take a long-term view on India's growth story.

"My appeal to everyone is we have to take a long term view - what's happening in India and what will be the results we will achieve over a period of time," he said.

On the recent slide in the rupee value, Chidambaram said there was no need to panic and the rupee will stabilise in the next few days.

The Indian rupee is under pressure due to the growing concerns over the current account deficit. It hit a record low of 58.98 against the dollar Tuesday.

Chidambaram also asked people to resist the temptation of buying gold for the sake of the health of the economy.

"I once again appeal to everyone to resist the temptation to buy gold. This will show positive impact on every aspect of Indian economy," he said.

The finance minister said reduction in gold imports would have a big positive impact on vital macro-economic indicators, especially the current account deficit, trade deficit and inflation.

"People think that they are buying gold in rupees, actually they are buying gold in dollars... If for one year there are no gold imports, it will change the current account deficit story of the country," Chidambaram said.

The monthly average gold import in the current fiscal was 152 tonnes as against 70 tonnes in 2012-13. The foreign currency outgo on gold import is estimated at $15 billion in the first two months of 2013-14.

Also, Chidambaram said, it would be wrong to believe that gold was the safest investment option. "To say that gold is the safest investment is wrong."

There were several attractive options and the informed investors were putting their money in them, he said.

Referring to the recent slump in gold prices, Chidambaram said those people who have invested in gold recent months have suffered huge losses.

However, the finance minister ruled out the possibility of any further hike in duty to curb gold imports.

On disinvestment, Chidambaram said he was confident of achieving the target of Rs.40,000 crore from stake sale in public sector firms in the current fiscal.

He said the government plan to sell 10 percent stake in Coal India that would fetch around Rs.20,000 crore to the exchequer.

The finance minister said the disinvestment proceeds will be used to finance expansion plans of other public sector undertakings, especially banks.

"If I disinvest in Coal India and if its raises Rs.20,000 crore, the entire money will go into the public sector. I am not using the money for current expenditure," he said.