Weak rupee, rising current account deficit are failures of ‘Modinomics’: Congress

The Congress has lashed out at the Centre’s attempts to check the rupee devaluation and control the current account deficit. The ‘last ditch efforts’ reflect the bankruptcy of economic vision of ‘Modinomics’, said Randeep Singh Surjewala, Media Incharge, Indian National Congress.

Surjewala said that the Modi Government has utterly failed to take stock of imperatives. This included India’s current account deficit (CAD) that has widened to a four-quarter high of 2.4 per cent of the gross domestic product (GDP) in the April-June quarter of 2018-2019 from 1.9 per cent in the January-March quarter of 2017-2018.

‘Merchandise trade imbalance’ is also expected to rise to $ 188 billion in the financial year 2018-2019 compared with $160 billion in the financial year 2017-2018, Surjewala said.

Trade deficit had jumped to $ 18 billion in July 2018 on account of falling export performance. In the first quarter of financial year 2018-2019, net outflow of foreign portfolio investments was $8.1 billion against $2.3 billion inflow of foreign portfolio investments in the fourth quarter of the financial year 2017-2018, reflecting no-confidence in Modi Government’s economic policies, Surjewala added.

Commenting on the impact of the current tax levies on fuel, Surjewala said, “Inflation remains high for the common man on account of Rs 11 lakh crore ‘fuel loot’ that has resulted as Modi Government increased the Central Excise on petrol by 211 per cent and on diesel by 443 per cent, besides multifold increase in Customs duty.’’ With petrol at Rs 81.91 per litre and diesel at Rs 73.72 per litre, Modi Government refuses to ease the sufferings of the common man.

Surjewala said that the Centre’s move to review mandatory ECB hedging conditions for infrastructure loans will not yield the desired results. He said, “In an environment of continuous depreciation of INR against USD, it is doubtful if any borrower will be interested in an unhedged product.”

On the move to permit manufacturing companies to avail themselves ECBs up to $ 50 million with a minimum maturity period of one year, Surjewala said, “Due to continuous increase in NPAs for the last 4 plus years under Modi Government, banks are refusing to finance manufacturing and infrastructure companies. Hence, Indian companies have to look for external commercial borrowing (ECB) option. As Indian companies buy more dollars, will it not lead to further depreciation of INR against USD and further increase in CAD?”

Reacting to the decision that the 20 per cent exposure limit of FPIs corporate bond portfolio to a single corporate group will be removed, and 50 per cent of any issue of corporate bonds will be reviewed, Surjewala asked, “Will allowing foreign portfolio investors (FPIs) unlimited access to any NCD issuance or removing the investment cap not lead to infusion of hot money in certain sectors?”

On the exception to masala bonds from withholding tax for issuances up to March 31, 2019, Surjewala questioned, “Why has this option been restricted till March, 2019? Is this an attempt to provide a limited window to certain foreign investors to bring hot money into Indian economy for speculative purposes?”

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