Finance Minister P Chidambaram today expressed confidence that government will achieve the fiscal deficit target of 4.8 per cent during 2013-14. Addressing the Annual General Meeting of the Indian Banks’ Association in Mumbai, Mr Chidambaram said that fiscal deficit has already come down from 5.3 per cent to 4.9 per cent through substantial fiscal tightening in the second half of last year.

Talking about the current GDP growth which has been pegged at a decade low of 5 per cent, Mr. Chidambaram said an increase in rural demand and lower inflation will help economic growth. He expressed confidence that India will soon achieve its growth potential of 8 per cent.

In order to kick-start the economy, Mr. Chidambaram said that the newly formed Cabinet Committee on Investment will certainly improve investor sentiment.

Mr. Chidambaram however expressed serious concern over the current account deficit and blamed increasing gold imports for the problem. Mr. Chidambaram urged banks to dissuade their customers from investing or buying gold. He said that surging gold imports are unsustainable and hence RBI and the government have no option but to take stronger measures. Mr. Chidambaram however expressed confidence that India would be able to finance its CAD from foreign investments without touching the forex reserves. The Finance Minister further clarified that there is no cause for alarm on the rupee front. He said that foreign inflows in the last two months have been extremely good and the currency will stabilize in the near future.

Talking about financial inclusion, Mr. Chidambaram said that banking access has improved recently and more branches will be opened in 2013-14 than ever before. He said that entry of new banks, rapid expansion in number of branches and a more spatial distribution of location of banks will lead to greater financial inclusion. The Finance Minister expressed hope that some new bank licences would be issued before March next year.