Rupee will correct itself and the economy will bounce back: P Chidambaram

In an attempt to reverse the perception of gloom and pessimism spread across the country, Finance Minister P Chidambaram on Thursday asserted in the Lok Sabha that rupee will correct itself and the economy will bounce back. However, acknowledging that the economy was going through a period of stress, the Minister reiterated that the government has been taking corrective steps to check rupee slide.

Confirming fears of a deepening slowdown and accentuating the widespread pessimism brought on by the steep rupee depreciation and falling markets, India's economy grew at its slowest pace in over four years at 4.4% in the first quarter of the current fiscal.

Further, on the recent sharp depreciation of rupee calling it a matter of concern, Chidambaram said that the currency had overshot its value. However, contradicting its own statement, the finance minister underscored that the value of the rupee depends upon various macro-economic factors like fiscal deficit, current account deficit and inflation, while adding that, Prime Minister Manmohan Singh has said some of the corrections in the value of rupee were the most-needed adjustments. In a continuous effort of soothing some jittery nerves, the minister, however, reiterated his commitment of meeting the tough fiscal deficit target for the fiscal year ending in March 2014.