Chidambaram turning it on for markets and economy

August 7, 2012   ·   0 Comments

 

Finance minister P has sent out signals that could bring cheer to investors and the stock market. He said that the government would work in tandem with Reserve Bank of India to bring down interest rates to stimulate growth. 6 Measures which he has taken after stepping as finance minister.

 

1)     Fiscal consolidation: To bring down interest rates, government needs to control the fiscal deficit. This is equal to the amount of money government borrows from RBI. The government has set up a committee to assist the government in formulating the path of fiscal consolidation. He expects the work to be completed in few weeks. Chidambaram said that adjustments have to be made both on expenditure and revenue side.

 

2)       Disinvestment Programme: The government said on Saturday it expects to come out with the first public offer as part of R30,000-crore disinvestment programme next month.

 Last month, the initial public offer of Rashtriya Ispat Nigam Ltd (RINL) was deferred by the government in view of the weak market conditions. The R2,500-crore RINL issue was originally proposed for July.

In 2011-12, the government missed the disinvestment target, managing to raise only about R14,000 crore against the R40,000-crore target.

 

3)      Inflation: Chidambaram said that the government would take steps to remove constraints on the supply side. He said that food grain stocks would be used to moderate prices and the government would enhance import of items in short supply. He expressed confidence about moderation in inflation in the medium term. “The government and RBI to ensure that the inflation is moderated in the medium term,” he said. 

 

4)      Investment: In the next few weeks the government should announce a number of schemes to encourage investments in the mutual funds and insurance sectors. Chidambaram said that an investment tracking system for proposals worth Rs 1,000 cr and above has been approved by the PM. “It is our intention to raise the investment level to 38 per cent of GDP as was in FY’07-’08,” Chidambaram said. According to RBI, there is a significant slowdown in the investment activity. 

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5)         Infrastructure Projects: Infrastructure projects which have got delayed because of delay in policy making will be getting nod from the Government soon. This is big relief for the infra structure companies which is the worst hit sector for indian stock market in the last 1 year.

 

6)      Currency volatility:  Chidambaram said that volatility of exchange rates has reduced in recent weeks and an assurance on investment climate would bring stability to the exchange rate. “We will fine tune policies and procedures to facilitate capital flows into India,” he said.  Over the past one year, the Indian rupee has slumped 25 per cent.

What do you feel about the finance minister P Chidabaram? Let me know your views in the form of comments. I would love to hear them.

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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