Prime Minister Manmohan Singh has said that neither there is intention to re-impose capital controls nor there will be reversal of reforms.

In the meantime, he has urged people to reduce the appetite for gold and economise the use of petroleum products.

Macro-stabilisation process

Making a statement on the falling rupee and state of economy in the Lok Sabha, Singh said that macro-stabilisation process is under way and the fruits of recent measures will help the rupee to stabilise.

'Short-term shock'

Terming the recent volatility in rupee as a 'short-term shock', he said: "That is the reality of the globalised economy, whose benefits we have reaped. We need to face them.”

At the same time the Government will ensure that the fundamentals of economy remain strong, he added.

“We are faced with challenges but we have the capacity to deal with them,” he said, while seeking the support of all political parties in this situation.

Rupee depreciation

About the reasons for the sudden and sharp fall in ruppee, he said external factors were responsible for it.

"What triggered the sharp depreciation in the rupee value are certain external forces. Global factors like tension in Syria and prospects of US tapering its federal policy also had an impact," he said.

No reversal of policies

There is no question of reversing the policies just because there is some turbulence in the capital and currency markets, he said, adding that the “sudden decline in exchange rate is certainly a shock, but we will address this through other measures, not through capital controls or by reversing reforms''.

GDP growth

Talking about growth, the Prime Minister expressed hope that growth in the second half will pick up as the monsoon is good. He also mentioned that the Government will now have to undertake more difficult reforms.

“The easy reforms of the past have been done. We have the more difficult reforms to do such as the reduction of subsidy, the insurance and pension sector reform, eliminating bureaucratic red tape and implementing the Goods and Services Tax (GST),” Singh said.

Not satisfied with the Prime Minister’s statement, the Opposition parties, including BJP, AIADMK, Left and SAD, staged a walkout in the Lok Sabha.

Shishir.Sinha@thehindu.co.in

(This article was published on August 30, 2013)
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