<div>India has buried the "ghost" of GAAR, Finance Minister P Chidambaram said on 22 January asserting that there is no threat of a rating downgrade in view of key economic decisions like allowing FDI in multi-brand retail and hiking fuel prices.<br /><br />India's economy will grow "no better than" 5.7 per cent in the current fiscal year but will regain traction in 2013-2014, the finance minister said on 22 January, as he sought to reassure international investors that the government remained committed to pro-growth policies and reforms. The finance minister predicted that growth would pick up momentum in the following year beginning in April, expanding by 6-7 per cent.<br /><br />Kicking off his campaign to woo investment, Chidambaram met over 200 top investors at the "India for Investment Conference" organised by the Citibank and BNP Paribas in Hong Kong. This was part of a four-city tour to try and boost capital flows into Asia's third-largest economy.<br /><br />India will raise by $5 billion each the caps on foreign institutional investors holding government and corporate bonds, Citi said in a note quoting the finance minister. Foreign investors will be allowed to hold up to $15 billion of government bonds and $25 billion in corporate bonds, the minister was reported to have said during a meeting with investors in Hong Kong.<br /><br /><strong>Read Also: <a href="http://businessworld.in/en/storypage/-/bw/comparison-of-india-china-economies-irrelevant-chidambaram/742337.30752/page/0">No Need To Compare India & China</a></strong></div><div><strong>Read Also: <a href="http://businessworld.in/web/guest/storypage?storyUrl=diesel-price-changes-up-to-government-fm&CategoryID=30752&articleId=741776&version=1.1&journalArticleId=741849"> Diesel Price Changes Up To Govt: FM</a></strong><a href="http://businessworld.in/web/guest/storypage?storyUrl=diesel-price-changes-up-to-government-fm&CategoryID=30752&articleId=741776&version=1.1&journalArticleId=741849"><br /></a></div><div><strong>Read Also: <a href="http://businessworld.in/web/guest/storypage?storyUrl=chidambaram-seeks-to-reassure-foreign-investors&CategoryID=30752&articleId=742038&version=1.0&journalArticleId=742039">FM Seeks To Reassure Foreign Investors</a></strong><a href="http://businessworld.in/web/guest/storypage?storyUrl=chidambaram-seeks-to-reassure-foreign-investors&CategoryID=30752&articleId=742038&version=1.0&journalArticleId=742039"><br /></a></div><div><a href="http://businessworld.in/web/guest/storypage?storyUrl=chidambaram-seeks-to-reassure-foreign-investors&CategoryID=30752&articleId=742038&version=1.0&journalArticleId=742039"><br /></a></div><div>A one-year lock in period on holding infrastructure bonds will be eliminated, he said.<br /><br />"There is universal acknowledgement that we have handled the GAAR situation fairly effectively and buried the ghost that GAAR will be some kind of a monster," he told news agency PTI in an interview.<br /><br />He said there is revival of investor interest in India as a result of a number of measures taken by the government since September.<br /><br />Chidambaram was also hopeful that fiscal deficit will be contained within the targeted 5.3 per cent of the GDP this fiscal and trimmed to 4.8 per cent in the next. Growth is likely to climb to 6-7 per cent from 5.7 per cent expected in the current year, he said.<br /><br /><strong>GAAR Handled Fairly</strong><br />The General Anti-Avoidance Rules (GAAR) gave unbridled powers to taxmen to check evasion of taxes by foreign investors that created huge apprehensions among investors.<br /><br />Last week, Chidambaram announced that GAAR implementation has been postponed by two years to 2016.<br /><br />"On specific questions on GAAR and I took some time in explaining all the measures we have made to GAAR and told them how market has received it very well here. There is universal acknowledgement that we have handled the GAAR situation fairly effectively and buried the ghost that GAAR will be some kind of a monster," he said. <br /><br />Chidambaram sought to allay fears that India was in danger of losing its investment-grade credit rating and being downgraded to "junk" status, as policymakers struggle to revive economic growth, rein in subsidies and hold down the fiscal deficit without triggering a backlash ahead of 2014 elections.<br /><br />"I was not worried when I took over (as finance minister) in August 2012, and after so many steps that we have taken, I think I should be less worried. In fact, all of us should be less worried. There should no case whatsoever for anybody to downgrade India," he said.<br /><br />"The silver lining is we are able to finance the current account deficit without reserves. Thankfully there are enough inflows of FDIs and FIIs (foreign institutional investment) and companies are able to raise money abroad under external commercial borrowing," he said.<br /><br />Fitch and Standard and Poor's last year cut their ratings outlooks for India to "negative", citing its slowing growth and bloated deficit and putting it in danger of being the first of the BRICs grouping of fast-growing economies to be downgraded to sub-investment-grade status.<br /><br />India's economy extended its long slump in the July-September quarter and looked on track for its worst full-year performance in a decade, highlighting the urgency of politically difficult reforms to revive activity.<br /><br />Since Chidambaram was appointed the government has opened up the retail sector and pushed reforms to allow more foreign investment in its insurance and pension sectors and simplify its tax laws.<br /><br />Last week it allowed state fuel retailers to raise prices to gradually align them with market rates and help cut its fuel subsidy bill.<br /><br />The finance minister said there was also room to sell off more state assets to ease fiscal strains. He forecast the government would raise $5 billion from such divestments in the current fiscal year and said he had approval for further sales in the next few years.<br /><br />Chidambaram will also meet investors in Singapore, London and Frankfurt over the next week.<br /><br /><strong>Clear & Confident</strong></div><div>"The finance minister was both clear and confident of what needs to be done, how and when it will be done, and timelines," said a research note released by Citi, which hosted Chidambaram's meeting earlier in the day with more than 200 equity and fixed-income investors.<br /><br />"The market has been cautious leading into what is seen as an 'election/populist' budget in February 2013. The finance minister was decidedly more positive. He suggests the fiscal deficit target will be met, taxes will not be raised and while policy will and should be biased towards the poor, the budget will offer a lot."<br /><br />The minister assured investors that the government's top priority is curtailing spending in the short term, while in the medium-term it aims to cut the fiscal deficit by 60 basis points per year, reducing it to 3 per cent in four years from an expected 5.3 percent this fiscal year, the note from Citi said.<br /><br />(Agencies)</div>
