 "FM rebuts critics on economy")
Replying to a debate in the Rajya Sabha on the country's economic situation, he said,"My government believes that while price stability is indeed important, it has to be in the larger context of growth and employment generation. Let Parliament take a stand on it, so that the message will go to the central bank."
He cited US President Barack Obama's recent statement his successor should have two objectives - price stability and employment generation.
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There was a time when central banks had the prime mandate of ensuring price stability, Chidambram said. Not any longer; it is a part of the said larger mandate.
The Reserve Bank of India (RBI) under outgoing governor D Subbarao was often perceived to be going aginst each other in terms of monetary stance. Raghuram Rajan will replace Subbarao from September 5.
Chidambaram emphasised that his government believed economic growth wasn't an end in itself but had to be inclusive and sustainable, even if that meant some part of it had to be sacrificed. "If the people in Niyamgiri decide against mining of bauxite, it has to be respected. We have to find other resources," he added.
He admitted retail price inflation was high and supply-side issues would have to be sorted to tackle the problem.
On attack from opposition parties on the rupee's fall against the dollar, the minister said this had to be seen in context. The rupee started depreciating only when US Federal Reserve chairman Ben Bernanke made a statement on withdrawing the quantiative easing programme and it had happened with many other currencies. Before this, the rupee was stable, he said.
To a member having earlier said the rupee and the dollar were evenly placed in 1947, Chidambaram said at the time, gold was available at Rs 88.62 for 10g; today, this cost Rs 29,000. "I will give you 88 dollars; you buy me 10g of gold," he told the member.
The minister said the rupee had to be seen in the context of inflation, the current account deficit (CAD) and fiscal deficit. The government was already on a path of fiscal consolidation and committed to bringing down the CAD to $70 billion this financial year (it was $88.2 bn in 2012-13), he said. Once, India convinces the world that it will finance the CAD through forex reserves and dollars flow in, the rupee will also stabilise, he said.
The aim of RBI and the government wasn't to seek any particular level for the rupee but to address its volatility, he stressed.
On criticism of the government's move to ease the way for foreign direct investment, he said FDI was on the top of the hierarchy of attracting money from abroad, the two other being foreign institutional investors and external commercial borrowing. He said just as the fiscal deficit was a red line for the government, not to be breached, it was so for the CAD, too.
The finance minister said he did not subscribe to the poverty line debate but whichever line one drew, nobody could argue that poverty has not declined. To this, the deputy leader of the opposition in the house Ravi Shankar Prasad said the World Bank's recent report, "prepared by your good friend (Kaushik Basu)" showed a third of the poor in the world live in India. To this, Chidambaram said,"But then, one sixth of the population also lives in India."