Economy will rebound in 6 to 9 months, says Chidambaram

Washington, Nov 16 (PTI) The financial meltdown will not spare any sector of the economy, but on the brighter side recovery could be just six to nine months away, Indian Finance Minister P. Chidambaram has said.

"There will be some slowdown in every sector... but
monetary measures, counter-cyclical measures and enlightened
measures by the companies themselves can get over this painful
period of adjustments and in about 6-9 months we should be
back to the growth rate," he told CNBC TV18 in an interview.

India has been growing by 9 percent and above for four
straight years, but various estimates suggest that the impact
of the economic crisis could shave off anywhere between 1 to 2
percentage points.

"We are not revising it (G.D.P. forecast) upwards or
downwards. It could be anywhere between 7-8 percent... The
only other large country recording such growth will be China,"
Chidambaram said.

Commenting on the decline in inflation to single digit --
8.98 percent -- after five months, he said, "I don't think we
should get too excited about the single digit inflation as it
is still close to 9 percent, much above our tolerance level...

"We would like the inflation to come down. We hope it
will happen in the next few weeks, so I think we are jumping
the gun when we are talking about a rate cut."

As regards the impact of slowdown on India Inc, he said,
"Bottom lines in the profit and loss account will indeed be
affected but it doesn't mean that something dramatic has
happened in the Indian economy."

Stressing that India is still an attractive destination
for foreign investors, he said the country's policy stance has
attracted significant foreign direct investment as well as
portfolio investment in the last four years.

On the robustness of the Indian economy, Chidambaram
said, "When I say that the fundamentals of our economy are
strong, I mean that companies like Tata Steel is basically a
strong steel producing company and Infosys and Wipro are
basically very strong player in the software market."

Our agriculture is producing enough to feed 1.1 billion
people of the country. They are not affected by what is
happening in rest of the world."

Referring to the outcome of the G-20 meeting, he said the
troika of Brazil, the U.K. and other country have been asked
to coordinate and they have promised to expand the financial
stability forum and work on more governance reform of the
International Monetary Fund.

Ruling out the possibility of another Bretton Woods
agreement, the Minister said developing countries would be
given greater representation and voice.

However, he added, "we still think that developing
countries are under represented and therefore they should be
given more representation and more voice, which means some of
other countries will have to have a hair cut."

On the protectionist tendencies of the developed
countries, Chidambaram said the G-20 declaration said no one
would be allowed to take protectionist measures as free flow
of goods, capital and services is the answer to the current
crisis.

As free trade is a powerful countercyclical measure in an
economic downturn, he said, efforts should be made for
succesful conclusion of Doha development round of the W.T.O.

On convergence of the accounting standards, Chidambaram
said there is a broad agreement on common accounting standards
among different countries and the standard setting board would
get together to work them out. PTI SHS
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