"Both RBI and the government are trying number of measures to cool inflation... We are looking at various suggestions that we have got. I am open to suggestion but I am afraid that there is no easy answer to cool retail inflation," he said while addressing investors here.
The CPI inflation, measured by movement in the retail prices of food items, soared to a seven-month high of 10.09 percent in October. The wholesale price-based inflation too shot up to 8-month high of 7 percent in the same month. He attributed the rising inflation to the high fiscal deficit incurred by the government to neutralise the impact of global financial meltdown of 2008.
The Minister further said although the government had offloaded 5 lakh tones of wheat to contain price rise, it would not cool prices of fruit, vegetable, milk and eggs. Chidambaram said his foremost priority would be to contain fiscal deficit and Current Account Deficit (CAD).
The fiscal deficit in the current financial year, he added, would be brought down to 4.8 percent of the GDP, from 4.9 percent in 2012-13. As regards the CAD, the Minister said he would endeavour to bring it down to below USD 56 billion, a figure which was given by RBI Governor Raghuram Rajan Wednesday.
CAD soared to a record high of USD 88.2 billion or 4.8 percent of the GDP in 2012-13. Government had initially proposed to bring CAD down to USD 70 billion. Later it improved the estimates in view of declining gold imports and rising exports.
"... The trough that we hit in the first quarter of 2013-14, is clearly a direct result of high fiscal deficit, a very high CAD, and inflation which is stubborn, high and unacceptable. We need to deal with them, we cannot wish them away. There are no easy answers," Chidambaram said.
The problem of inflation remains, he said, adding that there are three numbers to look at, which are core inflation, WPI and retail inflation.
"The RBI has a mandate. The mandate is to control inflation without killing growth. Monetary policy does not have impact on food inflation, I am sure (RBI) Governor also knows that," he said.
The Minister said WPI inflation between 6 and 7 percent, is "high, worrisome but something that can be addressed".
"There are no easy answers to that (retail inflation). Demand obviously is very high. There is not enough production of fruit, vegetable milk or eggs.... Inflation remains stubborn."
To contain spiralling inflation, RBI has hiked policy rates by 0.25 percent in its last monetary policy on October 29.
On the proposed inclusion of the government bonds into the global indices, Chidambaram said talks are on.
"There are some issues that have to be resolved. One of the issue is that we must remove the cap on the bonds," he said.
The RBI Governor is also talking to the managers of global bond indices, Chidambaram said, adding that he is confident that a decision will be reached soon.
If the government bonds are included into global indices that can help bring in at least USD 25-30 billion of fresh fund inflows, according to analysts.
Chidambaram also expressed the hope that much-delayed GST Bill will be tabled in the forthcoming Winter Session and get the approval of the House.
On exports, he expressed the hope that growth momentum will be maintained.
"Earlier fears that total exports may be less than last year's have vanished. Our exports will do well at the end of the year," he said.
He said core industries did well last month with an 8 percent growth.
"That is a very encouraging sign. In core industries, power is doing well; it's mining that is dragging but that is because of a variety of reasons like ban on export of iron ore but some of them have been lifted in the last couple of days."
On the latest IIP numbers (2 percent in September), he said: "Although core sector has grown by 8 percent, IIP has just moved up 2 percent. But even that is a movement upward. So there are some green shoots in the industry."
About the project delays, Chidambaram said work on some of the recently cleared projects has already started with banks disbursing loans. He also said the Cabinet Committee of Investment cleared 99 projects worth Rs 3.5 lakh crore.
Asking investors to be patient, he said the results of these decsions will not be visible immediately.
"Bankers have told me they have begun to receive enquires for large projects. The Tatas, for example, is building a new steel town like Jamshedpur."
On FII flows, he said: "Inflows at the moment are negative... Cumulative FII funds this fiscal is negative but we believe by the end of the year, it will be net zero or net positive. But FII and FDI put together is expected to be positive by the end of the year."
He also after Jet-Etihad, Tata-AirAsia and Tata- Singapore Airlines JV, he expects one or two more FDI in the aviation space.
"I think there will be at least one more or may be two proposals to come into the aviation sector," he said.
The Finance Minister also assured the investor community that elections or not, revenue dip or not, he will meet the 4.8 percent fiscal deficit target.
"Going forward, we have to continue to maintain fiscal discipline. I know there are questions, can we do that in an election year. Fortunately, elections are not this fiscal, they are in the next fiscal. So, mark my words, I will maintain fiscal discipline. We will end the year strictly adhering to the targets that I have set for myself.
"If I am not able to get one rupee in revenue, I will make up for that by reducing one rupee in expenditure. At the end of the day, we must and we will adhere to the targets," the Finance Minister reiterated.