World economy can bounce back if the advanced economies remove policy uncertainties, Finance Minister P Chidambaram said on Sunday, maintaining that the Indian economy has been impacted by the global growth slowdown.
In his address to the International Monetary Finance Committee here, Chidambaram said there has been marked improvement in financial market sentiment in the recent period following some significant measures announced by policymakers in the Euro area and the US.
“The global macro-economic situation is also beginning to stabilise. Although confidence has improved, it still remains fragile and the global economy continues to face several critical challenges,” he said.
“Despite all these uncertainties, the global economy can bounce back if advanced economies continuously keep progressing on removing policy uncertainties and if we are able to remove some of the major bottlenecks in the real sector of the economy,” Chidambaram said.
Addressing the annual Spring meeting of the IMF, Chidambaram said, global growth remains weak and the global economy continues to face several risks.
He said the present state of the global economy continues to pose several challenges for policymakers in advanced and emerging economies.
“Moreover, some new concerns have also arisen. As such, the global economy continues to pose huge challenges for policymakers, particularly in advanced economies,” Chidambaram said.
Although the re-balancing of the Euro area continues, recent developments in Cyprus suggest that the situation in the Euro area is far from settled, he said.
He also spoke about India’s economic situation, saying that the Indian economy was impacted by the global growth slowdown, while several domestic constraints also acted as a drag on economic activity.
“Economic activity in India remains somewhat sluggish. Given its relatively high degree of openness, the Indian economy was impacted by the global growth slowdown. At the same time, several domestic constraints also acted as a drag on economic activity,” Chidambaram said in his address. To address the concerns of the Indian economy, theauthorities have taken several measures in the recent period, Chidambaram pointed out.
The policy focus in recent months has been, on containment of fiscal deficit, along with measures that would boost investment levels in the economy and help raise the growth rate, he said.
A Cabinet Committee on Investment (CCI) has been set up to remove blockages and fast-track the implementation of large projects, especially infrastructure projects, the Finance Minister said.
Informing the IMF meeting that a plan is being implemented to gradually roll out direct cash transfers using Unique Identification Numbers (UID) beginning 2013, Chidambaram said eventually, cash transfers will be the preferred mode for the disbursement of subsidies and other monetary benefits to improve efficiency and avoid duplication and leakages.
Efforts are underway to pen the laws and implement the Goods and Services Tax (GST) and the Direct Tax Code (DTC) as early as possible, he said.
Inflation in India has begun to moderate, he said, noting that core inflation, in particular, has moderated significantly.
“Together with the measures taken for fiscal consolidation, this has provided space to the Reserve Bank of India for some monetary easing. To address growth concerns, the Reserve Bank has cut its policy rates twice during the last three months,” he said.
rDtiIJIJ 8IJ was originally envisioned in 2005 to be a 12 million tonnes capacity venture with an investment totaling $12 billion, is yet to take off mainly owing to issues to land acquisition.
Acquiring land for this project became a problem as local tribals and villagers literally stuck to their ground, refusing to part with their lands. Subsequently the project had to be downgraded after reconciliation was reached to acquire 2,700 acres of land, considerably down from the originally planned 4,000 acres. Resultantly it was decided by the project management that they will now produce 8 million tonnes per annum from the proposed steel plant.
In case of Vedanta’s lanjigarh refinery project also, while the plan was to expand it from the existing 1 million tonnes per annum capacity to 6 million tonnes per annum, due to the issues related to the site from where it plans to mine bauxite for the project, its future now lies in the hands of the Kalahandi Gram Panchayat.