Govt will contest Vodafone arbitration notice: Chidambaram

Reiterates that RBI should consider both price stability and economic growth

The government will defend a notice for arbitration from Vodafone Group Plc in a more than $2 billion tax dispute, Finance Minister P Chidambaram said on Thursday.

 

Vodafone said on Wednesday it had filed for an international arbitration against the Indian government, after the two sides failed to find a solution to the long-running tax dispute through talks.

 

Speaking about the monetary policy, Chidambaram said that RBI must consider both price stability and economic growth.

 

A Reserve Bank of India panel in January proposed moving to an inflation target of 4% in three years, with a 2% band on either side when setting monetary policy, sharply below current levels.

 

RBI is more conscious now than before that containing inflation and boosting growth are both important for the economy, and will keep that in mind while deciding the policy rate, he said.

 

Chidambaram said the total capital requirement for state-run banks is Rs 45,500 crore ($7.6 billion) in 2014/15 fiscal year, much lower than the Rs 11,300 crore provided for recapitalisation in the interim budget in February.