'Investment boom continues, prices under check'

India today said strong fundamentals helped it negotiate the recent stock market volatility and pressure on prices, enabling the investment boom to continue for the third year in a row.

"We are committed to continuing the process of fiscal consolidation in 2006-07 and thereafter," Finance Minister P Chidambaram said at an annual meeting of the World Bank and IMF. He added that the 8 per cent economic growth of the last three years would be sustained.

At a meeting of the International Monetary and Financial Committee of the Fund-Bank, he said India had by and large managed to contain inflationary pressures through monetary and fiscal policies, ensuring adequate supply of essential commodities.

Committing to meet the deficit targets, Chidambaram said, "The investment boom is continuing for the third year in a row. Strong fundamentals have helped the economy negotiate effectively the recent stock markets volatility, and underlying investment sentiment in the financial markets continues to remain positive."

Chidambaram said the price line had been more or less contained despite sky-rocketing of global oil prices, emphasising that business confidence and corporate performance continued to be favourable.

After crossing the 5 per cent mark, the wholesale price-based inflation declined to 4.78 per cent for the week ended September 2.

"Despite a surge in the oil import bill, the external current account situation is manageable, supported by robust exports and invisible receipts and capital flows," Chidambaram said. The foreign exchange market remained orderly, exhibiting a two-way movement.

Chidambaram said India was committed to reining in fiscal deficit within the targeted level during 2006-07, despite it touching more than 58 per cent of the budgeted level in the first four months of this financial year.

The commitment assumes significance after the recent face-off between him and Planning Commission Deputy Chairman Montek Singh Ahluwalia, who wanted him to release more funds for Plan projects, even at the cost of slippages in the fiscal deficit targets.

Chidambaram, who represents Bangladesh, Bhutan and Sri Lanka, apart from India on the IMF board of governors, spoke of high robust growth in the other South Asian countries and efforts to contain inflation there.