Speaking to media here, he also said tumbling of the rupee against the US currency was because of reasons such as fiscal deficit and foreign investors pulling out their money
P Chidambaram
Former Union finance minister P Chidambaram said Saturday that the GDP growth, reported at 8.2 per cent in April-June quarter, can decline going forward as the rise was possibly because of the low-base effect.
Speaking to media here, he also said tumbling of the rupee against the US currency was because of reasons such as fiscal deficit and foreign investors pulling out their money. Asked about impressive GDP growth in the first quarter of this fiscal, Chidambaram said, "Going further 8.2 per cent GDP growth will decline. 8.2 per cent is because of lowest base in last eight quarters and several economists have already said it yesterday it is because of low base of 5.6 per cent."
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"I am not unhappy with 8.2 per cent, but (it) is on the lower (base) of 5.6 per cent," he said. Earlier in the day, he tweeted, "Q1 GDP at 8.2 per cent is a statistic. Rupee at 70 to a dollar is a reality. In Delhi, Diesel at Rs 70.21 and Petrol at Rs 78.52, is a cruel blow." Fiscal deficit, pressure on the current account deficit, inflationary expectations and loss of confidence of foreign portfolio investors -- these four circumstances are putting pressure on the rupee, the senior Congress leader said.
"The first reason (for slide of the Rupee) is that the fiscal deficit is under pressure and there is a serious doubt whether the government will be able to stick to to its target of 3.3 per cent.
"Secondly, the current account deficit is under severe pressure. The years 2017-18 ended with the current account deficit of 1.9 per cent and 2018-19 will definitely be 2.2 per cent or 2.3 per cent, some people say may be around 2.5 per cent," Chidambaram said. A third reason is foreign portfolio investors "are pulling out the money", he said.
"Now why they are pulling out their money, I don't know but the fact is that they are pulling out money. Besides, the fourth reason is Reserve Bank's report released yesterday says that the inflation is expected to rise and they are keeping a careful watch. All these four reasons...are putting pressure on rupee and the government must address them," he said.
On demonetisation, he said the exercise had been devised to "help people convert their hoards of black money to white money". "This was the easiest money-laundering system devised by the Modi government...the most elegant money-laundering exercise in the world," the former finance minister said.
Also Read: P Chidambaram Moves Court Accusing CBI Of Leaking Charge Sheet To Media In Aircel-Maxis Case
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