Finance Minister P Chidambaram on Wednesday said that he would continue with fiscal consolidation and make efforts to contain Current Account Deficit (CAD) in a bid to strengthen the domestic currency.
“Given our fiscal deficit, given our Current Account Deficit, there will be some pressure on rupee and rupee will indeed depreciate. All that we are saying is that we cannot allow the rupee to go into a free fall. We are arguing for a stable rupee”, he said while replying to a discussion on the state of economy in the Rajya Sabha. The Minister also made a strong case for promoting foreign investment to bridge the CAD, which had touched the historic high of 4.8 per cent of the GDP in 2012-13 and is responsible for declining rupee.
On the issue of rise in prices of essential commodities, he said although the wholesale price-based inflation has come down to below five per cent in five months till June, efforts would have to be made to address the supply side problems to bring down the retail inflation. However, controlling inflation cannot be the only mandate of the Reserve Bank of India (RBI), he said and advised the central bank to view it as “part of a larger mandate (of promoting) growth and employment.”