Finance Minister P Chidambaram, on Tuesday, eased concerns about an errant monsoon and mounting inflationary pressures, while reiterating an upbeat forecast for the economy.
Chidambaram said all steps would be taken to keep inflation under control, bringing relief to the debt market after bonds hit their lowest for more than a year last week on inflation fears.
The inflation rate, which has been climbing for many weeks, stabilised at 6.52 per cent for the week ended July 16. "It will be a good monsoon this year, aiding agriculture," Chidambaram said. The monsoon has picked up in the last few days after a relatively dry July, when rains were 20 per cent below normal.
Chidambaram said the economy was likely to grow by at least 6.2 -7.4 per cent this year. This is, however, below the 7-8 per cent targeted in the Budget, and follows last year's 8.2 per cent growth in gross domestic product, the best in 15 years.
Chidambaram said the government would take steps to bring inflation under control. Finance Secretary D C Gupta also said there was no need to panic on inflation despite the recent increase in fuel prices.
Chidambaram also said he hoped to bring around the Left and resolve all outstanding differences with them. The Left have opposed budgetary proposals to allow more foreign direct investment in the telecommunications, insurance and aviation sectors.
Chidambaram said his government would bridge the widening gap in the living standards of the population by ushering in partnership, by facilitating investments not subsidies, and by technology not rhetoric.