FM upbeat on economy

Finance Minister P Chidambaram today said maintaining inflation expectations continued to be a priority even as global oil prices spiralled to over $70 per barrel.

Addressing the 2005 Annual Meetings of the Board of Governors at the IMF in Washington, Chidambaram said despite unprecedented hikes in oil price and revision of domestic retail prices, inflationary pressures remained subdued.

On the growth of the economy, he said the first quarter growth in April-June 2005 had been estimated at 7.1 per cent. The economy grew by almost 7 per cent in the last financial year, he added.

On the upcoming ministerial meet at Hong Kong on the need to strengthen the voice and representation of developing countries, Chidambaram said, "A number of proposals have been mooted in the recent years. The real issue is of political will. The momentum for the change has to come from the capitals, and it will be necessary to recalculate quotas on the basis of changed formulae with economically rational weights."

After the failure of the Cancun meet, the forthcoming Hong Kong meet has become an important milestone for resolving all pending issues and providing a thrust to the unfinished agenda of the Doha round.

India would like to see action following the comforting words, Chidambaram said referring to the recent consensus arrived at in the UN Millennium Conference calling upon the developed countries to scale up their assistance to 0.5 per cent of their GNI by 2010.

Welcoming the initiative taken by IMF Chairman Paul Wolfowitz and the UK to create a new framework for clean energy and development, he said, "It is important that transfer of technology be accompanied by transfer of financial resources, with continued support to conventional technologies, including renovation and modernisation, energy efficiency in the existing thermal plants and hydel projects. I am sure the new framework being launched today will address all these issues."

Commenting on the Indian industry, he said domestic industry was vibrant with the manufacturing sector growing at double-digit rates in the recent months.

Fiscal consolidation remained high on the agenda and infrastructure development was the primary focus of developmental expenditure, he added.

The external sector continued to remain a major source of strength for the economy with foreign exchange reserves at comfortable levels, he said.