The Hindu Business Line : Investing part of forex reserves in infrastructure may become reality

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Investing part of forex reserves in infrastructure may become reality

Foreign exchange kitty currently stands at $262 billion

We think we have found a way for a part of the forex reserves to be made available for investment. — Mr P. Chidambaram.

Our Bureau

Mumbai, Nov. 5

The decks seem to be cleared for investing a part of the country’s foreign exchange reserves in the infrastructure sector. The Finance Minister, Mr P. Chidambaram, indicated here on Monday that issues concerning such investments are being sorted out.

“We think we have found a way for a part of the forex reserves to be made available to the government or a government nominee for investment in infrastructure. The law allows the RBI to make available a part of the reserves and we will do it shortly,” Mr Chidambaram said at a meeting with industrialists, organised by the Mumbai Regional Congress Committee.

India’s forex kitty currently stands at $262 billion. The government-appointed committee on infrastructure funding headed by, Mr Deepak Parekh, Chairman, HDFC, had recommended that $10 billion of the forex reserves be invested in infrastructure.

Rising Rupee

Referring to the appreciating rupee, Mr Chidambaram asked exporters to adjust to the rise in the home currency by cutting costs, learning to innovate and improving their competitive edge.

“The economy is growing at 8.6 per cent. The rupee is bound to strengthen and we must learn to adjust to the appreciating currency,” he advised.

“If industry is shoring up its bottomline by retrenching jobs, then it would be a very short-sighted approach,” he cautioned

Mr Chidambaram said the Government had provided sops worth Rs 5,200 crore to exporters for combating the surge in the currency and that it would continue offering its support.

The Finance Minister said that India was poised to grow at close to 9 per cent in the current financial year.

He also expects the country’s per capita income to touch $1,000 by the end of the fiscal.

“Even if the agricultural sector grows no more than 4 per cent per annum and services and manufacturing sectors post double-digit growth, the country will achieve 9 per cent GDP growth. This will help per capita income to double to $2,000 over the next nine years,” he said.

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