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World Business News |
Chennai News
Thursday, March 24, 2005 (New Delhi):
The US Federal Reserve might have raised interest rates, but
Finance Minister P Chidambaram today made it clear that there
will be no hike in interest rates in India in the next six
months.
Chidambaram said in an interview to Bloomberg that there was
enough money in the economy to meet demands of companies as
well as to finance India's $35 billion budget deficit.
"There is huge liquidity in the economy. In the medium term I
don't see rates going up unless something unforeseen
happens," the Finance Minister said.
Markets welcome comment
And on cue, the money markets welcomed the Finance Minister's
comment.
There's more good news. Despite a one-year pause on the FRBM
front, Chidambaram says he's confident of cutting the
country's fiscal deficit next year to 4.3 per cent.
But the Revenue deficit is expected to stay at 2.7 per cent
of GDP.
The FM is also confident that all financial issues will be
manageable if the country's economy, Asia's fourth largest,
grows at about 7 per cent. One percent rise in tax earnings
will mean an additional $7.5 billion.
But there is a caveat. Much depends on a good monsoon and the
Finance Minister admits that while a good monsoon could push
growth figures up by upto 1.5 per cent, any rain shortfall
could mean India will grow by less than 6 per cent.
And for now, India can only wait for the southwesterlies to
see if the heavens do smile on the Finance Minister.
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