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Chidambaram Hopes For 8-9% Growth

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Finance Minister Palaniappan Chidambaram has said that "anything between 8 per cent and 9 per cent" economic growth this fiscal year would be good and that further export bans could be considered as a way to drive down inflationary expectations.
In an interview published by the Wall Street Journal on Tuesday, Chidambaram said it was too early to give a specific growth forecast for the year ending 31 March 2009. But he added: "We must aim at 9 per cent, as I will, and we must be happy if it is between 8 per cent and 9 per cent."
A quarterly Reuters poll in March forecast growth of 8.1 per cent in 2008/2009, which compares with a forecast 8.7 per cent for the fiscal year that has just ended.
The soaring price of rice and other foodstuffs is causing concern across Asia. "It is a matter of concern in a developing country and in a country where a large number of people are poor and the bulk of household expenditure is for food," Chidambaram said of India. "Inflationary expectation is driving prices," he added.
India's most widely followed inflation gauge, the wholesale price index (WPI), rose 7.14 per cent in the year to 5 April. The central bank had aimed for close to 5 per cent at the end of the 2007/08 fiscal year and its medium-term goal is around 3 per cent.
The central bank raised banks' reserve requirements in response to the latest data, which will soak up cash from the banking system that might otherwise fuel inflation.
Inflation was also being stoked by a mismatch between supply and demand, and by cartel-like behaviour in some sectors of the economy, Chidambaram was reported by the Journal as saying. The Monopolies and Restrictive Trade Practices Commission, India's anti-trust regulator, had begun inquiries in the rubber, cement and steel sectors, Chidambaram said.
India has banned the export of some rice and Chidambaram said he would consider banning exports of other goods, even if that went against the principles of free trade.
"As a short term measure ... we will consider such bans, too," he said, mentioning the possibility of export bans in the steel sector. However, he said further moves on food exports were less likely because "export of food items is virtually banned" already.
Chidambaram said inflation was not hurting investment. "All the indicators are that investments that are in the pipeline continue to remain buoyant and robust," he said.
(Reuters)


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