Date:01/06/2006 URL: http://www.thehindubusinessline.com/2006/06/01/stories/2006060104130100.htm

Back We will continue to attract FIIs: Chidambaram

Our Bureau

`Stock slide due to global factors'

New Delhi , May 31

The Finance Minister, Mr P Chidambaram, today expressed confidence that the country would continue to attract foreign institutional investors' capital even as he asserted that temporary net selling by such investors does not mean that there was outflow of foreign capital.

"My information is that there is lot of foreign capital waiting to come through FIIs. We will continue to attract FII capital. We also need to attract more foreign direct investment (FDI) and we will attract more FDI in the current year than that of last year," Mr Chidambaram said, when asked about net selling undertaken by FIIs during the last 11 trading days.

He also attributed the slide in stock indices to global factors. "Global markets are down and this is partly reflected in the Indian markets also," he said.

On the recent movement of the rupee, Mr Chidambaram said that rupee is market determined and that there was huge demand for dollars for import of capital goods to support manufacturing. "I don't see any reason why we should be unhappy. There is no reason to be concerned about exchange rate. So long as the movements are orderly both ways, it is not a cause for worry," he said.

Asked whether any increase in international oil prices would impact GDP growth of fiscal 2006-07, Mr Chidambaram said that if oil prices rise and if that rise is reflected in the domestic prices, then it will have some impact on inflation.

"There is no reason why it will impact growth rates. Rise in oil prices will not impact growth if industry is able to absorb increasing costs and remain competitive," he said.

Mr Chidambaram said that in the short, medium and long term, the country requires larger capital investment, which is only possible if reforms continue at steady pace in every sector.

"Foreign capital goes to that country where governments carry out structural reforms, legal reforms and administrative reforms and that is the road we have taken so far," he said.

Meanwhile, the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, told presspersons that there was no evidence of the Indian economy being overheated and that "all macro indicators are in reasonable okay shape."

He also said that GDP growth of more than 8 per cent could be sustained during the 11th Plan period of 2007-2012.