Chidambaram Rules Out Petro-Product Price Hike
"There was some increase in the oil import bill, and we have provided for that," he said, dismissing the possibility of a price increase of petroleum goods.
He was less categorical about the prospect of allowing foreign institutional investment in government debt. "It is not under our consideration at present," he told Business Standard, indicating that the government would wait to gauge the response to its decision to allow FIIs to invest their entire corpus in government debt, before making any new announcements.
Chidambaram, who was attending the World Bank-International Monetary Fund annual meetings here, said the government was "not close at all" to capital account convertibility.
"Capital account convertibility has to come in stages," he said at a press conference here on Wednesday.
"We have to first gain greater mastery over our balance of payments."
Alongside, he said India would also have to improve its rate of disbursement. India's rate of disbursement for World Bank funding is currently at about 13.5 per cent. "It should be upwards of 16 per cent to be satisfactory," the finance minister said.
The issue of improving disbursements will be a key area for discussion with World Bank president James D Wolfensohn, who begins his visit to India in less than fortnight.
Chidambaram said he had made a commitment to Wolfensohn to furnish him with possible solutions that could ensure that funding was spent according to the specified time-schedules.
The ideas could include a stern reminder to the states to improve their records. "The state governments have to face up to realities and address problems," Chidambaram, who has been emphasising India's federal structure in meetings, said. "Many state governments are waking up to the fact that overdrafts are not unlimited."
But he pointed out that the Centre could have considerable influence over the states because the ruling coalition was made up of parties that were currently in power in a majority of the states. "The Congress did not rule half the sates," he noted.