ID :
152970
Fri, 12/10/2010 - 06:09
Auther :
Shortlink :
https://oananews.org//node/152970
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FM cautions against volatility in FII flows, Europe crisis
New Delhi, Dec 9 (PTI) The Indian Government on Thursday
said though the economy is on the recovery mode, it still
faces risks from volatility in capital markets, slow down in
Foreign direct investment inflows, trade imbalance, high
current account deficit and European crisis.
Addressing the Parliamentary consultative committee
attached to his ministry, Finance Minister Pranab Mukherjee
said even while the economy is on a path of higher growth, yet
there are certain areas of concern.
In this regard, he specifically mentioned trade
imbalance, volatility of Foreign Institutional Investors,
current account deficit, reduction in FDI inflows to almost
half in last six months and above all, crisis in Euro zone
affecting trade balance.
FIIs have pumped in a record 39 billion dollars in the
Indian capital markets in this calendar year so far.
However, FII money is considered hot and volatile in
nature compared to FDI.
FDI inflows, however, declined 28 per cent in the first
half of this fiscal to 11 billion dollars.
India's trade deficit stood at 81.7 billion dollars
during the first eight months of this fiscal, more than half
of its exports.
High commodity prices may further increase the deficit,
the analysts said.
The current account deficit, representing net flow of
income out of the country barring capital movements, surged
three-fold to 13.7 billion dollars in the April-June quarter
over the same period last year.
The deficit widened due to higher imports because of
economic recovery and larger payments overseas for certain
services.
After sovereign debt crisis in Greece, Spain and
Portugal, banking crisis has erupted in Ireland.
Mukherjee said the Government has taken several fiscal
and administrative matters to contain the price rise and
continues to be vigilant on the price front.
Meanwhile, food inflation marginally rose to 8.69 per
cent during the week ended November 27 against 8.60 per cent a
week ago.
The Finance Minister said silver lining is that inflation
in food item has declined to single digit.
"With normal rainfall, the kharif production is now
expected to rise by over 10 per cent year on year for food
grains and even higher for cash crops such as cotton and
sugarcane," he added. PTI
said though the economy is on the recovery mode, it still
faces risks from volatility in capital markets, slow down in
Foreign direct investment inflows, trade imbalance, high
current account deficit and European crisis.
Addressing the Parliamentary consultative committee
attached to his ministry, Finance Minister Pranab Mukherjee
said even while the economy is on a path of higher growth, yet
there are certain areas of concern.
In this regard, he specifically mentioned trade
imbalance, volatility of Foreign Institutional Investors,
current account deficit, reduction in FDI inflows to almost
half in last six months and above all, crisis in Euro zone
affecting trade balance.
FIIs have pumped in a record 39 billion dollars in the
Indian capital markets in this calendar year so far.
However, FII money is considered hot and volatile in
nature compared to FDI.
FDI inflows, however, declined 28 per cent in the first
half of this fiscal to 11 billion dollars.
India's trade deficit stood at 81.7 billion dollars
during the first eight months of this fiscal, more than half
of its exports.
High commodity prices may further increase the deficit,
the analysts said.
The current account deficit, representing net flow of
income out of the country barring capital movements, surged
three-fold to 13.7 billion dollars in the April-June quarter
over the same period last year.
The deficit widened due to higher imports because of
economic recovery and larger payments overseas for certain
services.
After sovereign debt crisis in Greece, Spain and
Portugal, banking crisis has erupted in Ireland.
Mukherjee said the Government has taken several fiscal
and administrative matters to contain the price rise and
continues to be vigilant on the price front.
Meanwhile, food inflation marginally rose to 8.69 per
cent during the week ended November 27 against 8.60 per cent a
week ago.
The Finance Minister said silver lining is that inflation
in food item has declined to single digit.
"With normal rainfall, the kharif production is now
expected to rise by over 10 per cent year on year for food
grains and even higher for cash crops such as cotton and
sugarcane," he added. PTI
