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Home / Politics / Policy /  Govt seeks to kick-start investment as rupee tumbles

New Delhi: The cabinet committee on investment (CCI) cleared 36 projects entailing investments of 1.83 trillion in its meeting on Monday.

“The message we are sending is that the investment cycle has started and we are pushing it further, it will gather pace as we go on," finance minister P. Chidambaram told reporters on Tuesday. The 36 projects are in sectors such as power, oil, gas, roads and railways.

Among the projects approved by the cabinet panel on Monday are 18 power projects with an investment of about 83,772 crore and nine infrastructure projects entailing investments of 14,084 crore, he said.

The minister said that the fuel-supply agreements for the power projects would be signed by 6 September even though a bulk of them will be completed by the initial deadline of 31 August.

“We found that a number of projects were stalled for the lack of this clearance or that clearance. CCI I think has held five or six meetings and we are clearing these projects removing the bottlenecks and getting it started," said Chidamabaram.

The minister’s announcement, however, did not lift the rupee, which was trading at 65.75 per dollar at 12.14pm, a new low for the currency.

In his morning briefing, Chidambaram said the rupee had overshot its true level and that India is one of the several emerging markets that are facing such problems.

“We have to be patient and firm and the rupee will find its appropriate level," he said.

The minister denied that the national food security Bill, which promises to provide cheap foodgrains to a vast majority of Indians, that was cleared by the Lok Sabha late on Monday will affect the fiscal deficit. Chidambaram said in his budget speech on 28 February that the fiscal deficit for 2013-14 would be 4.8% of gross domestic product (GDP) and reiterated on Tuesday that 4.8% was the “red line".

“The red line will not be breached. We think we have provided enough money" till the end of this fiscal to implement the scheme, he said.

Foreign exchange dealers said the Indian currency was partly depressed by concerns over Parliament’s approval on Monday to the food security Bill.

“It’s not out of choice, but out of compulsion that the finance minister is announcing so many things," said G. Chokkalingam, managing director and chief investment officer of Centrum Wealth Management in Mumbai.

“The trinity of the fiscal deficit, slowing growth and an unstable currency is hitting us badly. In addition to these, the government has passed the food security Bill which may put fear in the mind of rating agencies."

It will also take time for these projects to have any impact on the economy, which will reduce the immediate affect of the news in financial markets, said another analyst.

“These projects have long gestation periods. So it will take several months, maybe years to achieve the desired economic activity," said Hitendra Dave, head of global markets at HSBC India.

“I think to the extent that the sheen had worn off because of decisions not taken, this will help undo the damage of sense of indecision in the government."

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