By IANS
New Delhi : The government will not take any further step to curb capital inflows as the measures taken by the market regulator will help in moderating them, Finance Minister P. Chidambaram said Monday.
“One did not expect instant reaction to the measures announced by SEBI (Securities and Exchange Board of India). I believe the measures taken by SEBI will moderate inflows in the short to medium term,” Chidambaram said at the Economic Editors’ Conference here.
“We are watching the situation. At the moment we are not contemplating any more measures,” the finance minister added.
Underscoring the need to manage capital inflows, Chidambaram said: “The short-term challenges on the external front are posed by the need to effectively manage an unprecedented influx of capital inflows and burgeoning foreign exchange reserves and to contain the adverse effects of appreciation of the rupee on Indian exports.
“Further, domestic prices may also be impacted by international hardening of food grain, commodity and energy prices,” the minister said, adding that the economy must be resilient enough to face the “adverse effects of the economic slowdown occurring in some of its major trading partners”.
Chidambaram also said: “Another cause of concern is the slow-growing farm sector that still supports the livelihood of a majority of the population. Issues like stagnant yield rates in many important crops, declining per capita availability of food grains and need for additional public investment call for urgent policy attention.”
He reiterated the government’s target of four percent annual agricultural growth envisaged in the 11th five-year plan (2007-2011).
Chidambaram said industrial growth has been one of the most important factors for the growth of the economy.
“Industry has, of late, been one of the major drivers of the growth of the Indian economy. The last four years have witnessed impressive rates of industrial growth, averaging around 10 percent.
“In 2006-07, the industrial growth was a splendid 11.5 percent, while the rate of growth of manufacturing was even higher at 12.5 percent.”
The minister also said the country’s foreign exchange reserves rose to $199 billion during March 2007. It further increased to $262 billion as on Oct 26, 2007.