India Inc must learn to live with rising Re: FM

Finance Minister P Chidambaram today said Indian companies have to learn to live with a rising rupee. The Indian currency would continue to appreciate given the faster pace of growth of the economy and that should make exporters to innovate to compete internationally, he said.

"The economy is growing at an average rate of 8.6 per cent and the rupee is bound to strengthen,'' Chidambaram told captains of industry at an interactive session organised by the Mumbai Congress Committee.

"Indian companies must learn to adjust to trade in an environment where rupee would appreciate. The concern is about the rapid appreciation. Had it (pace of rupee rise) been slow, industry and commerce would have got time cope up with changes," he said.

The government will support the trade in facing the situation. But they should also keep in mind that has enjoyed subsidised exchange rate regime for many years before they had to face surge in the value of rupee, he said.

Opining that rupee appreciation will be with us for long, he said "merely because profits are down, I don't think we should present an alarmist picture.''

The rupee has strengthened by over 10 per cent against US dollar since end-March 2007. The government is alive to problems of exporters and has already announced three packages worth Rs 5,200 crore to partly mitigate the impact of rising rupee, the finance minister said.

"Thanks to global turmoil (economic slowdown in certain regions), India's economic growth in 2007-08 will be close to 9 per cent compared to 9.4 per cent in 2006-07," he said.

Industry needs to innovate and cut the cost to remain competitive and should not to resort to cutting jobs. This is a short-sighted approach, having implications for losing the market. It is difficult to reestablish presence in market, he said.

Turning to the growth potential of the Indian economy, Chidambaram said assuming nine per cent per annum growth in economy over next 18 years, the per capita income will rise four fold to $ 4,000 by 2025.

He expressed dissatisfaction over working of public private partnership in areas like for infrastructure. At present it is just simply leveraging private capital for public project.

The private sector can come up with project and specify areas where it will need public sector support. it could be government or state-owned enterprise, he added.