Millennium Post

As Rupee burns economy, PM set to lead firefight

With the rupee depreciating sharply against the US dollar, the world’s only reserve currency, and economic growth remaining sluggish, Prime Minister Manmohan Singh announced on Monday that he would have an interaction with captains of industry later this month to discuss ways to contain the worsening current account deficit (CAD) and boost industrial output.

On Monday the Indian currency fell to an all-time low of 61.21 against the greenback before the Reserve Bank of India (RBI), the country’s central bank, intervened to help it partially recovery to 60.61 per dollar. Monday’s fall was sparked as US jobs data cemented bets that the Federal Reserve Board, which regulates American monetary policy and profoundly affects international financial markets, will wind down its $85 billion-per-month quantitative easing (QE) programme.

Later in the day, Reserve Bank of India officials also met officials from oil companies, the biggest dollars buyers in the domestic markets, to discuss their currency needs. The rupee has weakened 9.3 per cent in 2013, the worst fall in emerging Asia. The weaker currency is sparking foreign sales of bonds and stocks, which in turn is further pressuring the rupee.

Singh will meet leaders of India Inc on 29 July to review the state of economy and work out steps to push growth. The discussions will cover measures to correct the current account deficit and revive industrial growth, the Prime Minister’s Office (PMO) said in a statement issued on Monday. The issue of depreciation of the rupee and its impact on trade and industry will also be discussed. The meeting assumes significance as the government has been concerned over the high CAD, depreciating rupee and sluggish growth.

The current account deficit last fiscal (April 2012- March 13) was 4.8 per cent of gross domestic product (GDP) and the government intends to bring it down to 4.2 per cent of GDP in the current financial year (2013-14).

The Prime Minister will also discuss with captains of industry ways to accelerate skill development, besides development of the Delhi-Mumbai Industrial Corridor (DMIC), Chennai-Bangalore Industrial Corridor (CBIC) and Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC).
Singh will meet the industry leaders a month after setting an investment target of Rs 1.15 lakh crore in public-private partnership (PPP) projects across infrastructure sectors in rail, port and power in the next six months to pep up investor sentiment.
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