Govt to further liberalise FDI policy, says Chidambaram

Faced with sliding rupee, Finance Minister P Chidambaram today said government will further liberalise the FDI policy and encourage public sector undertakings to raise funds from overseas markets.

Addressing media on completion of one year as Finance Minister, he exuded confidence that economy would record a growth rate of 5.5 to 6% in the current fiscal, up from 5% a year ago.

Chidambaram, who took charge of the Ministry on August 1 last year, said the government was also looking at raising import duty on non-essential luxury items and promoting exports to contain Current Account Deficit (CAD), which had soared to a high of 4.8% of the GDP last fiscal.

'We are looking at some compression in non-oil and non-gold import to curb demand for non-essential luxury items,' he said.

The other steps being considered by the government to deal with the CAD include relaxing the External Commercial Borrowing (ECB) norms, attracting investments from sovereign wealth and pension funds and NRI deposits.

Replying to questions on rupee, the Minister said though he did not have fixed target in mind but he would endeavour to check volatility and end speculative trades on the domestic currency.

The rupee slipped to the near record low level of 61.21 to a dollar in early trade today. It was trading at 61.20 but later recovered to 60.94 to a dollar.

On the possibility of a sovereign bond issue to raise forex, he said, 'that is an option on the table but I will not rush into any decision'.

The government recently relaxed the FDI policy raising the caps in several sectors and permitting foreign investment in many others under the automatic route.