Finance minister P Chidambaram on Monday said the FY14 current account deficit (CAD) will be contained at $35 billion and that his ministry and the RBI will consider easing gold import restrictions after the monetary policy meet on Tuesday.
?Some relaxations were made a few days ago when more banks were allowed to import gold. We could consider some more relaxations in consultation with the RBI,? Chidambaram said. ?Let the RBI’s monetary policy be announced tomorrow and then we will consider whether some relaxation can be done,? he said.
India used to be the top buyer of gold before the government slapped a record 10% import tax and put in place other restrictions to cut a ballooning CAD. The RBI recently allowed five private banks to import the metal.
Addressing a press conference at the Congress party’s headquarters here, Chidambaram defended the UPA government’s economic record and said notwithstanding the macro-economic weakness since the Lehman Brothers bankruptcy in 2008, the country’s economy had done well under Prime Minister Manmohan Singh’s stewardship.
?We will end the year with a fiscal deficit of 4.6% as planned. Our reserves have crossed $300 billion. We expect to add $25 billion by end of today to our reserves. And CAD, which was originally estimated at about $60 billion, is now likely to be much smaller. Perhaps about $35 billion,? the minister added.
?The economy is stable. Nobody talks about a downgrade anymore and fundamentals have strengthened.?
Chidambaram also hit out at the election commission (EC) for not allowing the new gas pricing policy to come into effect from April 1, and said that the decision to increase the gas prices, which has become a political talking point in the run-up to the elections, was a well considered one.
?I think there is no case to revisit the Cabinet decision. It has taken in to account all pros and cons including reservations expressed by different ministries. So the Cabinet decision is the right decision and I would defend it,? the minister said.
?In my view there was no obligation on the part of ministry of petroleum and natural gas to refer this issue to the EC in the first place. I think they did it out of abundant caution. The cabinet reviewed the decision about 2-3 months before the EC notification came,? Chidambaram, who decided not contest elections this time, added.
Chidambaram also said the process of granting bank licences should continue uninterruptedly. ?Governor (Raghuram) Rajan made it clear that they referred to EC only out of caution. The process of inviting, screening, scrutinizing and selecting candidate for grant of bank license is a RBI driven process and the government has no role at all.?
?Therefore, where the government has no role, to interrupt the process for an election is an indirect admission to the world that some how the government has a role in the granting of bank licences. That will send a completely wrong signal.?
Answering questions on the action India could take against Switzerland for not sharing information on Indians hoarding black money in the European country, the minister said that he intends to raise the issue at the G-20 meeting in Washington DC on April 10 -11. ?And later on every forum we will raise the issue that Switzerland is non-complaint with the G20 resolution that the era of bank secrecy is over,? Chidambaram said.
