Indian companies strong, safe: Chidambaram

IN GOOD COMPANY: Chidambaram says Tata Steel, Infosys and Wipro examples of great Indian companies.

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Washington: The global financial crisis will affect “every sector” of the Indian economy but growth will return in six to nine months, Finance Minister P Chidambaram has said.

"There will be some slowdown in every sector but monetary measures, counter-cyclical measures and enlightened measures by the companies themselves can get over this painful period of adjustments and in about 6-9 months we should be back to the growth rate," Chidambaram told CNBC TV18 in an interview.

The Indian economy has been growing by 9 per cent and above for four straight years, but is predicted to drop by 1 to 2 percentage points because of the global financial crisis.

"We are not revising it (GDP forecast) upwards or downwards. It could be anywhere between 7-8 per cent. The only other large country recording such growth will be China," Chidambaram said at the sidelines of the G20 summit.

Indian companies will be affected but the economy remains strong. "Bottom lines in the profit and loss account will indeed be affected but it doesn't mean that something dramatic has happened in the Indian economy."

Stressing that India is still an attractive destination for foreign investors, he said the country's policy stance has attracted significant foreign direct investment as well as portfolio investment in the last four years.

On the robustness of the Indian economy, Chidambaram said: "When I say that the fundamentals of our economy are strong, I mean that companies like Tata Steel is basically a strong steel producing company and Infosys and Wipro are basically very strong players in the software market.

“Our agriculture is producing enough to feed 1.1 billion people of the country. They are not affected by what is happening in rest of the world."

Referring to the outcome of the G-20 meeting, he said the troika of Brazil, the UK and other country have been asked to coordinate and they have promised to expand the financial stability forum and work on more governance reform of the International Monetary Fund.

Ruling out the possibility of another Bretton Woods agreement, the Minister said developing countries would be given greater representation and voice.

However, he added: "We still think that developing countries are under represented and therefore they should be given more representation and more voice, which means some of other countries will have to have a hair cut."