Struggling growth, poor investor sentiment, high deficits and an extremely volatile currency – these have been the defining factors of Indian economy over the past year. While finance minister P Chidambaram acknowledged these challenges facing the economy, he is also confident that steps taken by the government will be able to post growth between 5.5 and 6 percent this fiscal.

“There are challenges but that’s what brings (out) the best in us,” the “eternal optimist”, as Chidambaram calls himself, said in his address to media persons on Wednesday while summing up his tenure in the last one year. He assured that various measures to reverse the situation and return to the good times were on the anvil.

Congratulations Mr Finance Minister! We are all looking forward to it.

But with sudden weakening of the rupee over the last two months, persisting trade imbalances, and languishing economic growth, the situation looks rather grim. The minister, though, refused to prioritise these problems and promised to deal with all of them in tandem.

A day after the Reserve Bank revised downward its growth forecast to 5.5 percent, and sent anxiety levels through the roof, Chidambaram said he is confident that the economy would be able to grow anywhere between 5.5 and 6 percent!

Besides flexing of foreign direct investment (FDI) norms, he listed out other options being considered by the government to boost the economy. These include encouraging state-owned companies to raise funds abroad. “The government is actively considering significant liberalisation of the FDI policy which would further increase long-term foreign investment.  We will ask some public sector companies to raise funds abroad,” he said. “We have also decided on some measures to attract longer term NRI funds.

“In consultation with the RBI, we propose to liberalise longer term external commercial borrowings (ECBs) in a sustainable way.”

It is interesting to note that Chidambaram also highlighted the slump in the global economy to stress that India, too, has been affected by it. “When the global economy is challenged, the Indian economy will also face challenges,” he said.

It is in this context that one wonders why the government is then hell-bent on attracting foreign funds in numerous forms – be it FIIs, FDIs, NRI funds and the like.

Depending on foreign funds to provide the economy the necessary fillip is good but it is important to remember that the global economy is facing a turmoil, which is as bad as ours, if not worse. Being realistic, thus, is crucial.

These are measures for the longer term, the minister claimed. Agreed, but shouldn’t we get our own act right first?

Chidambaram pointed that the cabinet committee on investment has provided clearances for 157 projects worth Rs 1,60,900 crore till date. But how many applications had come in all? The delays have been questioned enough. The question that arises next is, has the committee given these approved projects a specific deadline to roll out their projects and complete them as well? Because the increasing heap of “cleared” files is not going to boost India’s growth chart.

Implementation is the key, and infrastructure facilities are crucial prerequisites to achieve that.

In fact, the extant infrastructure is in dismal condition, which is why India’s own corporate houses looking to expand are flocking to alternative investment destinations instead of reaching out to newer markets within the country. Thus, if Chidambaram says “I think it is a truism that only domestic investment that will bring in its wake foreign investment,” then it is necessary to first ensure that a conducive internal environment is provided to spur domestic investment.

Another interesting proposal Chidambaram has in mind is to encourage public sector companies to raise funds abroad. When asked whether PSUs had the ability to do so, the minister exuded confidence and said some PSUs have very strong balance sheets and would be able to raise funds from overseas markets comfortably. The minister, however, refused to name any such PSU, as also the target amount of funds he is looking to raise.

In such a situation, it is very important for the PSUs to adopt best practices and highest standards of performance – not just to compete with other Indian companies but with those across the globe. Because, like us, most countries have their own PSUs to bail out and, hence, will not invest in India, no matter how much the desi political masters crack their whips.

“India has the potential to grow at 8 percent and above. And nothing below that will satisfy me or should satisfy anybody in the country,” Chidambaram said. Yes we can, sir, but how? And, more importantly, how soon?