We are prepared for QE tapering, says Chidambaram

Finance Minister P Chidambaram says the government is taking a number of steps to shore up the country's forex reserves.  

"Tapering will start. I think Ben Bernanke hinted again today that tapering will start. We are in fact prepared for tapering, we are preparing for tapering. First of all we are shoring up our foreign exchange reserves since the FCNRB revised policies were announced, we have had about USD 7.4 billion coming in," he told CNBC-TV18's Gopika Gopakumar in Washington where he is attending an intervention at the IMF Committee plenary meeting. Also Read: US default? Asian policymakers ready $6trn forex safety net
On the NSEL matter he says: "The genesis of NSEL trading on the commodity market under an exemption order, you will find that what I am saying is legally correct. In any way that is what I have been advised by my legal advisors. NSEL, if it has defrauded any of its investors or clients, must pay a price.
The Economic Offences Wing (EOW) of the Maharashtra Police has registered a case. They made one arrest before I left. I didn't know about the second arrest. Those who have committed the acts of malfeasance or misfeasance will pay a price." Below is an edited excerpt of the exclusive chat on CNBC-TV18  Q: What gives you the confidence that India will be able to achieve a 5-5.5 percent growth this year considering the reforms that you have undertaken, have not borne fruits?
A: True, in the Q1 of 2013-2014, growth slowed down to 4.4 percent but unless there is a further slowdown, why should I lower it below 4.4 percent? It can only be up from 4.4 percent. Let us wait to see what Q2 brings and I am sure the second half of the year that is Q3 and Q4 will be much better than Q1 and Q2. Q: Do you think India is prepared to face tapering once if and when that happens in December or early next year?
A: Tapering will start. I think Ben Bernanke hinted again today that tapering will start. We are in fact prepared for tapering, we are preparing for tapering. First of all we are shoring up our foreign exchange reserves since the FCNRB revised policies were announced, we have had about USD 7.4 billion coming in. So we are taking a number of steps to shore up foreign exchange reserves. That is one.
Secondly, we have entered into an agreement or we will enter into an agreement with Japan for a USD 50 billion swap arrangement.
Thirdly, portfolio investment has brought in about USD 2 billion already then we are encouraging oil marketing companies (OMCs) to borrow abroad to finance their purchases of oil. We have liberalised ECB and that will bring in some money. There are a couple of telecom investments round the corner. I think one of them has already announced the number, USD 2 billion. That is likely to come in November or December. So a number of things, number of steps have been taken but I think this time Ben Bernanke will be a little more careful, more calibrated and he will perhaps communicate his actions well in advance.
There is no question of the government taking over NSEL. The government is concerned about the regulated entities, one of them is MCX which is a commodity exchange, other is MCX-SX and the other is the promoter of the MCX and MCX-SX, which is the Financial Technologies. All three are under watch. As far as MCX-SX is concerned, I think the SEBI has, through regulatory action, forced two of them to resign. So MCX-SX is now managed by a board which does not have suspected or tainted people. As far as MCX is concerned, the show-cause notice has been issued, the two weeks period is to expire and the FMC regulator will take action after he receives the reply to the show cause notice. Q: Looking at our investments, do you think the retail sector has taken a setback because Wal-Mart has decided to slowdown the expansion plans in India?
A: Wal-Mart will be a spec in India’s retail market. India’s retail market is driven by millions of standalone stores. India’s retail market has been strengthened by Indian retail chains. So why do we assume that Wal-Mart will make a huge difference to India’s retail market.
The genesis of NSEL trading on the commodity market under an exemption order, you will find that what I am saying is legally correct. In any way that is what I have been advised by my legal advisors. NSEL, if it has defrauded any of its investors or clients, must pay a price.
The Economic Offences Wing (EOW) of the Maharashtra Police has registered a case. They made one arrest before I left. I didn't know about the second arrest. Those who have committed the acts of malfeasance or misfeasance will pay a price.