The finance minister is in Boston to sell the India story to foreign investors. The meeting, organised by Citigroup and attended by over 85 FIIs, saw the FM promising 8 percent growth by FY16
The key points that were raised were the political uncertainty to which there is no assurance that can be given. The FM said that at this point in time there is no risk to the government falling.
On growth, the FM reiterated 6.1-6.7 percent as the target for FY14, 7 percent for FY15 and 8 percent for FY16.
However, next year is an election year. So, it remains to be seen if Chidambaram makes a comeback.
On inflation, FM said that core inflation is going to be brought down to below 3.2 percent and Wholesale Price Index (WPI) will be brought down to 6 percent. In March, core inflation was at 3.5 percent and WPI was at 5.96 percent. So with the inflation coming down, FM hopes that the Reserve Bank of India (RBI) will also have more space to move on rates.
On the CAD, he said that it has to be handled by increasing exports in the long-term, but in the short-term the fact that oil and gold prices are coming down is good for the CAD. He also expects the Q4 CAD significantly lower than the Q3 number that you saw at 6.7 percent.
All in all, the finance minister is trying to reach out to investors, especially to foreign institutional investors (FIIs) saying that the Know Your Client (KYC) registration process is going to be simplified.
The government has already gone in for fungibility of assets. At this point in time, FII and foreign direct investment (FDI) investment is an economic imperative.
Infrastructure continues to be the big question mark. On that the FM has given in an assurance saying that in the next few weeks the problem of coal linkages to power plant is going to be resolved, but considering the various stakeholders you have operating in that field it remains to be seen whether he will be able to hold on to that promise.
