Centre takes string of decisions to keep fall in rupee under control; Read here

NewsBharati    15-Sep-2018
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New Delhi, September 15: With an aim to keep the rising Current Account Deficit (CAD) and the fall in rupee in control, PM Modi-led central government on Friday announced various steps including the removal of withholding tax on rupee-denominated bonds known as Masala bonds issued till March next year, relaxation for Foreign Portfolio Investment (FPI), and curbs on non-essential imports.

 

Notably, the decisions were taken at a meeting chaired by Prime Minister Narendra Modi in New Delhi to review the state of the economy. During the high-level meeting, PM Modi was briefed by RBI Governor Urjit Patel and officials of the Finance Ministry.

After the meeting, Finance Minister Arun Jaitley while talking to reporters said that several issues were discussed during the meeting and decision on them are likely in the next few days. Giving a brief detail of the meeting, Minister Arun Jaitley said that the government has decided on a number of steps to contain CAD, which widened to 2.4 percent of the GDP in the first quarter of 2018-19.

“One of the important decisions is that mandatory hedging condition for infrastructure loans will be reviewed,” the FM added. “This relates to External Commercial Borrowing (ECB),” Arun Jaitley said adding that it has been decided to permit manufacturing sector entities to avail ECB upto 50 million dollars with a minimum maturity of one year, instead of the earlier limit of three years.

“Further, restrictions will be removed with respect to FPI exposure limit of 20 percent in corporate bond portfolio to a single corporate group or company or entity and 50 percent of any issue of corporate bond,” the FM informed.

The Finance Minister also stated that the commodities of which imports will be cut down will be decided after consultations with concerned ministries. He noted that external factors like policies adopted by the US, trade war and crude oil prices are impacting economies like India, despite strong fundamentals. Jaitley also added that India's growth rate as compared to other countries of the world is quite high.

The Finance Minister, in the end, added that more issues would be discussed in a meeting with the Prime Minister Narendra Modi. While Economic Affairs Secretary SC Garg said that the measures would definitely have a meaningful impact.