Will take more steps to turn around economy: P. Chidambaram

The world economy is going through a difficult phase and no economy is immune from the slowdown, Finance Minister P. Chidambaram said today at the Delhi Economics Conclave.

"I am confident that the steps we have taken, and some more steps that we will take in the next few weeks, will help turn the Indian economy around," he said.

Expressing concern over the slow growth witnessed by emerging economies, the minister said “diminished space for policy action” was leaving little scope for improvement.

In the recent past, government has taken a number of measures, including opening up of foreign direct investment, or FDI, in multi-brand retail and hiking foreign investment cap in the aviation sector, to
boost economic growth and restore investor confidence.

Yesterday, the Union Cabinet cleared setting up of a Cabinet Committee of Investment to fast-track large project entailing an investment of more than Rs 1,000 crore.

"It is too early to say whether the measures have begun to bear fruit, although it is our expectation that they will do so," Mr Chidambaram said.

Concerned over sticky retail inflation, the Finance Minister said: "There is no reason at all to become complacent." While headline inflation has moderated to 7.45 per cent in October, the retail inflation remains high at 9.90 per cent.

India's economic growth fell in the second quarter to 5.3 per cent compared with 5.5 per cent in the previous quarter and 7.3 per cent in the corresponding period a year ago, underscoring the urgency of implementing politically difficult reforms to spur a revival in Asia's third-largest economy, government data showed. Growth in 2011-12 fell to a nine-year low of 6.5 per cent. The Reserve Bank of India expects growth at around 5.8 per cent in the current fiscal year.
 
Stressing that the present challenge is different from the one faced in 2008, Mr Chidambaram said: "The present challenge calls for bold and innovative measures."

While in 2008-09, imports had reduced considerably due to a fall in international crude oil prices, the situation at present is different as, while exports are declining, imports continue to remain high mainly on account of crude and gold.

With rapid globalisation of economy, the external sector is becoming more vulnerable, he added.

The Finance Minister also asked Asian G20 member nations and Russia to increase the resource base of Asian Development Bank for development of the region.

With inputs from PTI