At an annual event in New Delhi that brought together economic editors and other members of the media from across the country for a dialogue with the government, Finance Minister P Chidambaram said that India is nowhere near a recession.
He also spoke about liquidity, inflation and his expectations on GDP growth, as he has done earlier on several other occasions.
The Finance Minister on Monday, tried to explain to the journalist community—how he plans to try and keep recession far from India's shores.
Chidambaram said, “I hope the worst is over.”
For over two hours, the usually elusive Finance Minister, patiently conveyed his ministry's plans to a number of financial journalists across the country.
“India is nowhere near recession. The growth estimate for the first quarter of 2008-09 is 7.9 per cent and the second quarter undoubtedly will show high positive growth,” he said.
The Finance Minister reiterated that increased liquidity should mean increased flow of credit and that he would personally be meeting the chiefs of banks from across the country after their meet with the RBI governer.
For those who could read between the lines, he did drop a hint about further easing of interest rates.
Chidambaram said, “If inflation continues to decline, policy rates may also moderate with a bias towards growth.”
However, for the first time, Chidambaram admitted that fiscal deficit will take another year to drop to three per cent of the total GDP, but he ruled out an immediate infrastructure fund. Instead, he stressed on speedy completion of existing projects.
“The increasing expenditure on infra sector is an important part of the counter cyclical measures that are being contemplated to address the impact of the global slowdown. On the whole the general outlook continues to be of cautious optimism,” Chidambaram said.
Interestingly, the Finance Minister compared the performance of his government with that of the previous one, clearly trying to drive home the belief that growth has, on average been greater by three per cent under his watch.