Chidambaram sees signs of growth reviving

Finance minister P Chidambaram has expressed confidence that the economy will grow between 5.0 and 5.5 per cent in the current fiscal. He said green shoots are visible and measures taken by the government are sure to take the economy back to its potential growth rate of 8 per cent soon.

"Green shoots that are visible here and there will multiply and the economy will revive. There will be an upturn in the second half of this year and it is quite possible that the estimates made by the Reserve Bank or the PMEAC or the government of growth between 5-5.5 per cent will be realised," the finance minister said.

India's economic growth slipped to decade's low of 5 per cent in 2012-13 and during the first quarter of current fiscal it stood further down at 4.4 per cent.

Chidambaram said this while addressing a conference of bankers and economists, Bancon 2013, an annual event of the Indian Banks' Association.

Banks, he said, should deal firmly with wilful defaulters, but handhold those who are reeling under the impact of the economic slowdown. He also asked the bankers not to desist from taking hard decisions and promised to defend them in case of bonafide decisions going wrong.

The finance minister asked banks to adapt to new ways of thinking and said he wanted new aspirants with differentiated models of banking to be given preference while issuing new banking licences.

''It'll be a pity if new banks are clones of existing ones,'' he said.

''I appreciate the need for different models of banking. I am happy that some of the applicants to the RBI for licence have different models. We need different kinds of banks to cater to different segments of Indian society,'' said Chidambaram.

The RBI is currently scrutinising 26 applications by private entities to run banks. The new licences are expected to be issued in January.

Speaking about the economy, Chidambaram said, inflation, especially food prices have continued to remain a challenge for the government.

Referring to a case against another possible rise in interest rates, the finance minister said the monetary policy has no impact on food inflation and the nation needs to augment supply and improve logistics to reduce food inflation.

Chidambaram said the current account deficit which was reported at $88 billion last year, will be contained this fiscal to below $56 billion.

The growth figures for the second quarter are scheduled to be announced on 29 November.