India infrastructure projects set to boost economy

An Indian man works at a welding workshop in Ahmedabad, India, Thursday, Aug. 22, 2013
Image caption India's policymakers have been trying to spur a fresh wave of growth after the recent slowdown in its economy

The Indian government has approved infrastructure projects worth 1.83tn rupees ($28.4bn; £17.7bn) to revive the economy and boost the falling rupee.

Finance Minister P Chidambaram said 36 stalled projects in oil, gas, power, road and railways sectors were cleared.

"The message we are sending is that the investment cycle has restarted, and we are pushing it," he said.

The announcement came on a day the rupee hit a new record low, touching 65.6 against the US dollar.

Recent attempts to reduce volatility in currency markets have so far failed to have any result.

'Be patient, be firm'

The finance minister told reporters on Tuesday that the rupee had "overshot its true level", but said that India was not the only country facing problems.

"As I said in parliament, every emerging market is challenged today. So India is also challenged, and the impact is felt both on the equity market as well as the currency market," news agency Reuters quoted him as saying.

"I think we'll simply have to be patient, be firm, do whatever is required to be done, and the rupee will find its appropriate level.

"What I said a few days ago, I still maintain it. The rupee has overshot its true level, it's undervalued.

"Others have confirmed it. And we have to be patient and we have to be firm and we have to do what requires to be done," he said.

Deficit target

Mr Chidambaram also tried to allay fears over the impact of the Food Security Bill on the country's finances.

The bill, which was approved by the lower house of parliament on Monday night, is aimed at providing subsidised food to two-thirds of the population in an effort to eradicate the widespread hunger and malnutrition plaguing India.

But the ambitious legislation will cost 1.3tn rupees ($19.76bn; £12.75bn) a year. Critics say it is a profligate plan that will hurt India's economy.

However, the minister said it would not lead to the government overshooting its fiscal deficit target.

"After providing for the Food Security Bill, we will remain within the limit I have set for myself in the budget," he said.

The country has already been hurt by a slowdown in growth and a widening current account deficit.

Its economy, Asia's third-largest, grew at an annual rate of 5% in the 2012-13 financial year, the slowest pace in 10 years.

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