New Delhi: Finance Minister P Chidambaram is hopeful that the gross domestic product growth may touch 9 per cent this year. He said that the annual growth rate of 10 per cent may be achievable by 2010.
Chidambaram said that the fears of policy inaction till general elections are exaggerated.
He added that the FDI in retail and insurance is stuck as of now and that the pace of infrastructure projects needs to be quickened.
CNBC-TV18's Executive Editor, Udayan Mukherjee spoke to Finance Minister, P Chidambaram during the Euromoney Conference in London. The FM stated that he is still confident of near 9% GDP growth for India this year. He acknowledged that rupee appreciation was a headache for Indian exporters, but he said the rise was due to huge capital inflows into the country and no immediate steps were planned to curb the currency's strength.
On the issue of inflation and liquidity tightening, he said that there is no conflict with RBI on monetary tightening. “If property prices moderate by 10 percent, that will be a good thing," Chidambaram said, blaming supply constraints for soaring house prices. He said on Wednesday that central bank policy tightening and currency strength had helped to moderate inflation and more rate rises may not be needed if the trend continues.
"So far central bank actions have moderated inflation. The rupee rise has also helped moderate inflation to some extent," Chidambaram said. "If inflation is contained at current levels and shows a decline, there is no reason why interest rates should go up."
A fall in property prices may even tempt some funds to invest in other sectors, he said, adding: "Some moderation in property prices will not be a bad thing at all."
One of the sectors that has experienced booming price growth has been real estate. Most major Indian cities have seen property prices double in the past two years. Foreign property funds have been flocking into India ever since rules on inward investment in the construction sector were relaxed.
Analysts believe a property price correction of 10-40 percent is due in the short term. The last time a property bubble burst in India, prices fell as much as 70 percent between 1995 and 2001.
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