New Delhi, July 31 (IANS) The government will further liberalise and bring in more clarity to the overseas investment policy to attract foreign funds that will help tackle the current account deficit, Finance Minister P. Chidambaram said Wednesday.
Addressing a press conference on his completing one year as finance minister, Chidambaram said the government is “actively considering liberalising FDI” policy.
Chidambaram’s comments came less than two weeks after the government liberalised FDI policy for various sectors, including telecom, insurance, defence and retail.
The finance minister said the government would soon bring in more clarity to the foreign direct investment (FDI) regulations in multi-brand retail which would help attract investments into the sector.
“The commerce ministry is in the last leg of clarifying the policy,” he said, adding the proposal is likely to be placed at Thursday’s cabinet meeting.
The government last year had opened the gates to foreign investors in multi-brand retail allowing up to 51 percent FDI.
However, no foreign investment has taken place in the sector so far.
Chidambaram hoped that the overseas investors would enter into the Indian multi-brand retail markets, once the issues were clarified. “FDI in multi-brand retail is being held back because there are some pertinent questions.”
Chidambaram, who took charge of the finance ministry Aug 1, 2012, said the government was also considering a number of steps to help curb current account deficit that surged to a record high of 4.8 percent of the country’s gross domestic product (GDP).
“We are looking at some compression in non-oil and non-gold import to curb demand for non-essential luxury items,” he said.
The finance minister expressed confidence that government would be able to finance the current account deficit.
“We have already financed current account deficit by $88 billion (in 2012-13)…We will be able to fully finance current account deficit this year too,” he said.
Other measure under consideration to curb current account deficit include liberalisation of external commercial borrowings (ECBs) norms and attracting investments from NRI deposits, pension funds and sovereign wealth funds.
On sovereign bonds, Chidambaram said: “Sovereign bond issue is an option on the table, but I will not rush into any decision.”
RBI Governor D. Subbarao Tuesday had opposed the idea of issuing sovereign bonds saying it was not good for long-term financial stability of the country as it would make Indian economy more vulnerable to external shocks.
On the rupee, Chidambaram said the recent depreciation in the Indian currency was “quite unexpected”.
“There is no level for the rupee, what we want is a stable currency,” he said.
The rupee slipped to 61.18 against a dollar Wednesday, a day after the Reserve Bank of India (RBI) left all key policy rates unchanged. The Indian currency is nearing the record low of 61.21 hit earlier this month.
