Govt not at loggerheads with RBI: FM

INVESTOR-FRIENDLY Chidambaram hints aviation FDI norms can be tweaked if it helps

NEW DELHI: Finance Minister P Chidambaram on Sunday rejected the perception that his ministry and the Reserve Bank of India (RBI) were at loggerheads, and said that they were not 'antagonistic' to each other, while indicating that foreign investment norms in aviation could be further tweaked if a willing buyer and seller are found.

"The equation between the government and the central bank in India is the same (as) any country. It is always arguing for growth on the part of government and arguing for stability and taming inflation on the part of the central bank," he said in an interview to PTI.

Despite the finance minister coming out with a fiscal consolidation roadmap and addressing the central bank’s concerns over government finances, the RBI did not reduce interest rates in its half-yearly policy review on October 30 after which Chidambaram said he may ‘walk alone’ on the growth path. Subbarao has maintained that inflation at 7.45% is still ‘quite high’.

Chidambaram said that during his recent visit to Mexico City for a G-20 meeting, along with RBI Governor D Subbarao, he had “spoken to several governors and several finance ministers (and), the relationship is exactly the same”.

Commenting on the lack of FDI inflow into aviation, in which norms were changed in September to raise foreign airline investment in Indian firms to 49%, he said the government was open to tweaking the norms further.

The finance minister said the central PSUs have been put on notice to either invest their surplus cash or lose it. “If they have not invested and they still have surplus cash, they have been told to invest... the principle is use it or lose it,” he said. They may be forced to pay special dividends if they fail to invest.