Economy

Rupee may stabilise at a little over 50 vs $, Basu says

Our Bureau Kolkata | Updated on November 16, 2017 Published on July 07, 2012

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The rupee is likely to stabilise at a little over 50 against the dollar, the Chief Economic Advisor to the Ministry of Finance, Dr Kaushik Basu, said here on Saturday.

While a volatile rupee, at 56-57 to the dollar, is undesirable, expecting it to fall below the 50-level is an improbability, he said.

“Rupee volatility at 56-57 (to the dollar) is not desirable; the days of Rs 47 and Rs 48 are gone. It will probably be around the low 50s and we have to live with that,” he said while speaking at an interactive session organised by the Bharat Chamber of Commerce.

India should also take advantage of the recent depreciation in the rupee to push exports, he said.

Equity inflow

According to Dr Basu, the withdrawal of dividend tax cuts in the US was likely to result in increased equity inflow into the country. This, if supplemented by reforms, might see India on “top of the world chart”.

“I have no doubt that in another two to three years’ time, India will be on the top of the global charts,” he said.

Reforms

Reiterating the need for reforms, Dr Basu said that reforms through the legislative route might be difficult to achieve immediately. But small-ticket ones such as “managed and slow” diesel decontrol and opening up of the retail sector might be possible, eh said.

Contrary to popular opinion, opening up of the agri-retail sector would see foreign majors bring in efficiencies. This would benefit farmers, with higher demand for their produce and consumers with a “marginal” drop in price, he maintained.

“GST is not going to happen in a hurry. For that, we need a Constitutional change and there isn’t a kind of majority for that. But there are smaller things like the diesel decontrol, in a slow and managed way, that can happen,” he added.

Inflation

The rate of Inflation, he added, is set to fall below 7 per cent in September this year. The figures — wholesale price index — will be reflected in the October data released by the Ministry, he added.

“You will see the impact of these in the October figures. Inflation is now at 7.5 per cent. However, in another two to three months, there will be some softening,” he said.

>abhishek.l@thehindu.co.in

Published on July 07, 2012
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