Meeting with industry captains on July 29 to also discuss ways to revive growth
With the currency breaching the Rs 61-level against the dollar, Prime Minister Manmohan Singh has called a meeting with leading industrialists on July 29 to review its impact on industry.
The Reserve Bank of India is expected to announce a series of measures to arrest the currency’s fall. The rupee has depreciated over 9 per cent this year. Last July, the rupee was hovering around the Rs 55-mark . Its plunge past the Rs 61-level has put both the Government and the RBI in a bind.
“Discussions (between the Prime Minister and industry leaders) will cover depreciation of the rupee and its impact on trade and industry,” a statement issued by the Prime Minister’s office said.
The meeting will also consider measures to correct the current account deficit and revive industrial growth. Two other items listed for the meeting include skill development and ways of accelerating it, and the development of industrial corridors.
A senior government official said that the meeting was likely to focus largely on the rupee. This is because of the volume of short-term and long-term external debt falling due for repayment in the next one year. According to Nomura, India’s short-term residual maturity debt – short-term debt and long-term debt due in the next one year – is on the rise. The agency, quoting the RBI’s figure, said that this had risen to $172 billion as of March 2013 from $147 billion a year ago.
Meanwhile, Finance Minister P. Chidambaram postponed his proposed visit to the US by almost a day to discuss the latest situation with the Prime Minister. Although there was no official briefing on what transpired at the meeting, it is believed that the various measures to stem the rupee’s fall were discussed.
The RBI is likely to announce measures such as restricting outflows and allowing oil companies to source dollars directly. Restricting outflow means putting temporary restrictions on pre-payment of foreign currency debt by corporations. The central bank could also mandate that refiners buy dollars via a separate window and not in the currency markets, a measure that would help ease pressure on the rupee.