With the historic fall in rupee, Prime Minister Manmohan Singh on Thursday admitted that the country was facing ‘difficult times.’

Under pressure from the Opposition, the Prime Minister said he would make a detailed statement on the economy in both Houses of Parliament on Friday.

“It cannot be denied that the country is faced with a difficult economic situation. And there are several causes,” Singh said in the Rajya Sabha, while making impromptu remarks amid a severe verbal attack against by the Opposition on the Government on the sliding rupee.

Although the rupee recovered to close at 66.55 to the dollar on August 29 against the life-time low of 68.80, in the previous three trading days, it lost 560 paise against the dollar. Between August 1 and August 28, the rupee tanked by 840 paise, or about 14 per cent, and in the current year by 1,381 paise or over 25 per cent.

“I do not deny that some domestic factors, too, are responsible,” he said, listing external factors that have impacted the rupee and the Indian economy, like the US monetary stance and problems created by political tension with regard to Syria and their “inevitable consequences on oil prices.”

“We have to reckon with these uncertainties,” Singh said, adding he needed “some time to reflect” on these. “I would be happy to make a statement tomorrow,” he added.

Later, in the Lok Sabha, the Prime Minister said he respected the concern expressed by members of the House over the fall in the rupee.

Both the Houses saw repeated disruptions over the rupee’s fall.

The Opposition created an uproar, alleging that there was panic in the country over the sliding rupee.

adjournments

The Lok Sabha witnessed repeated adjournments amid Opposition demands for an immediate statement from the Prime Minister, while the issue created uproar in the Rajya Sabha for some time. Various Left and AIADMK members also trooped into the Well in the Lok Sabha.

As soon as Rajya Sabha met for the day, Leader of the Opposition Arun Jaitley raised the issue of the depleting value of rupee.

He said there was ‘panic’, as people did not know at what level the devaluation would stop.

Inflationary pressure would be severe as rising food prices, coupled with imported inflation in the form of rising oil prices in the global market, would lead to a serious situation, he said.

“It is a panic situation. We want to know from the Prime Minister what he has in mind for reviving the currency. In a democracy, the buck stops with the Prime Minister,” he said, adding, that, “The Prime Minister must take the House and the country into confidence.”

For the last 6-7 years, there is mismanagement of the coal economy. As a result of which we have to spend 20 billion dollars in importing coal into this country, he added. CPI (M) MP Sitaram Yechury alleged that the country had “come back to square one” after 22 years of reforms under Manmohan Singh.

In the Lok Sabha, Leader of the Opposition Sushma Swaraj sought Speaker Meira Kumar’s permission to speak during Question Hour on the plummeting rupee.

“Day before yesterday, there was a debate in the House on the state of the economy in which the Finance Minister gave a long speech enumerating 10 steps and maintained that if these are implemented the economy will improve. After this the confidence of the country and the investors should have increased by at least 10-20 paise, but it has actually fallen,” Swaraj said.

shishir.sinha@thehindu.co.in

(This article was published on August 29, 2013)
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