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Govt backs RBI’s pro-India stand, vows ‘specific steps’ to curb CAD

Amid weakening of the rupee to 60-levels against the dollar hours after the Reserve Bank of India's status-quo policy, the government on Tuesday said it will announce 'specific steps' to contain the widening current account deficit (CAD), which has put pressure on the local currency.
'We have already taken some steps on liberalising FDI. We are also exploring some other options for stably and sustainably funding the CAD. We will announce specific measures in the next few weeks,' said Raghuram Rajan, chief economic advisor to the Finance Ministry.

'We welcome the RBI policy statement...the RBI and the government are on the same page and working together to achieve stability and growth,' Rajan said while responding to the RBI's decision to maintain key interest rates. Apart from the RBI's steps, he said, 'The government is also exploring ways, including measures to reduce imports and measures to incentivise or expand exports' to contain the CAD. The CAD touched a historic high of 4.8 per cent of GDP in 2012-13, mainly on account of import of gold and petroleum products.
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