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FIIs are here to stay, says Chidambaram

Special Correspondent

In calendar 2005, the FDI inflows witnessed a 14 per cent growth at $2.57 billion. Despite this, the darker side to the FDI story is that India gets a fraction of what China gets.

NEW DELHI: Unruffled by the recent sharp fluctuations in the stock and foreign exchange markets, Finance Minister P. Chidambaram on Friday maintained that the rupee was still strong, barring against the dollar, and that the economy would continue to lure healthy inflows from foreign institutional investors (FIIs).

"The rupee is strong despite some nominal depreciation ... If you go by [the] real effective exchange rate (REER), [the] rupee is still a strong currency," Mr. Chidambaram said, speaking at the annual session of Assocham here.

Maintaining that FII inflows would remain strong in the long term, Mr. Chidambaram said: "I am confident that we will continue to get large inflows of foreign institutional investment ... There are periods when there are outflows. We must be able to take all the outflows and inflows in stride."

Giving proof of his confidence, he said that during the April-August period in the current fiscal, the investment by FIIs was $4.3 billion while it was already $8.52 billion in the calendar year 2005.

As for foreign direct investment (FDI), Mr. Chidambaram said the inflows were 20 per cent higher at $1.9 billion during April-August this fiscal. In calendar 2005, the FDI inflows witnessed a 14 per cent growth at $ 2.57 billion. Despite this, the darker side to the FDI story was that "we [India] get a fraction of what China gets."

Giving details of the various economic parameters, the Finance Minister indicated that the fundamentals were strong with comfortable foreign exchange reserves and while exports were growing at a healthy 20 per cent, imports were also witnessing a surge of 33 per cent. Owing to the wide gap, the country's trade deficit that appeared large was a "healthy sign of a growing economy" as the manufacturing sector was also charting a robust growth path alongside.

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