“All we are trying to do is ensure that there is greater transparency in the manner in which funds flow into India, and that investors are subject to some kind of due diligence,” Mr Chidambaram told reporters in the Norwegian capital Oslo on Tuesday. “We are not imposing capital controls, we are not against any kinds of inflows, or discriminating between one flow or the other.”  “The initial reaction was negative but investors and foreign institutional investors absorbed what we have done and broadly agree that it is good for the market, and good for investors in the long term,” he claimed.

“At the same time, we want to moderate these inflows and we have invited all these investors to register as FIIs in India,” he said, adding “I think this message has now been widely disseminated and accepted, and the market is now back to normal. Normal in India over the past few months has been a dizzying rise.”

Inflation a concern
“Inflation as measured by wholesale price index has been contained at 3 per cent by monetary and fiscal measures, but the threat of inflation is always there,” Mr Chidambaram said. “Commodity prices are still high, oil prices are high and food prices are still high, so I do not think we can relax our vigilance on inflation,” he added.
“What the central bank will do I do not know, but we must maintain constant vigilance on inflation,” he said, pointing out that the pace of the rupee’s appreciation has led to problems.

“We recognise that an economy that is strong will result in some appreciation of the currency, especially versus the dollar, but it is the rapid appreciation of the rupee that has caused some problems to our exporters,” he said, observing “We have taken care of that by offering them some support.”

Positive outlook
“We would like to maintain a competitive exchange rate without hurting investments,” the finance minister said, adding the value is set by the market.

Meanwhile, Mr Chidambaram said near-term economic outlook was “extremely positive” and investment boom showed no sign of abating.

“Upsides are very large, and the outlook for the near term is extremely positive,” he said in a presentation to Norwegian-Indian business conference in Oslo.

He said an investment boom that started in 2004 showed no sign of fading.
“This boom will continue for the next four to five years,” he claimed. “None of the factors that are driving growth will change,” he averred.

In this regard, he said, India has a target of doubling gross domestic product per capita in nine years and doubling it again in the nine years after that.