Settlement in INR

Apropos the news report ‘RBI sets up mechanism to settle trade transactions in Re’ (July 12), at a time when the value of the rupee is sliding, the RBI’s decision to introduce measures for invoicing, payment and settlement of exports and imports in Indian rupee (INR) is quite welcome.

These measures would enable Indian exporters to pay it in INR from the balances in the designated Special Vostro Account (SVA). Similarly, Indian importers too could pay in INR to the credit of SVA. The set-off feature available under this mechanism in adjusting the export receivables against the import payables in respect of the same overseas buyer/supplier would help the traders to arrive at their net balance in INR either to be retained or carried forward for future trades.

Such measures would help in growth of global trade with more emphasis on exports from India and to be traded in INR, besides an alternative to the common existing practice of settling in US dollar.

RV Baskaran

Chennai

Internationalising the rupee

In the midst of the steady decline of the rupee, the decision of the RBI to allow settlement of global trade in rupees is a welcome move. The decision to internationalise the rupee needs to be looked at in the light of several factors. The clamour for a country’s currency is decided by its demand and supply position, its balance of trade with trading partners, the robustness of its economy, etc.

For a currency to dominate in the international arena it should have a robust payment system. For instance, following the ban on Russia from using SWIFT messaging system, Russia and China could quickly embrace to an alternative payment system like Cross-border International Payment System and System for Transfer of Financial Messages.

For the rupee to play a significant role in the global arena, India’s commodity exports need to go up significantly. Also, to attain international recognition, India’s trading partners should be willing to invoice their trade in rupees, and in the light of a strong dollar index and rising interest rates, government securities issued by Indian government should find favour as an investment tool by countries.

Srinivasan Velamur

Chennai

Don’t hike policy rate

This refers to ‘Some MPC members seen pushing for more aggressive rate hikes as inflation persists’ (July 12). That investment growth is gaining momentum is evident from the double-digit credit growth of the banking sector. The receding level of bad assets in the books of banks is creating a favourable environment for banks to expand their loan books.

Given the progress being made by the economy, a further policy rate hike either out of the usual monetary policy cycle or in the ensuing meeting is unwarranted as it will be counter-productive. The prices of goods and services and commodities are beginning to wane and, therefore, it is not imperative to hiking the policy rate.

VSK Pillai

Changanacherry, Kerala

Mallya’s dues

Apropos ‘SC sentences Mallya to 4 months in jail’ (July 12), the recovery of ₹9,000 crore from Mallya is definitely a challenge for banks. At each stage it is proved beyond doubt that bankers were negligent in monitoring the funds given. If the bankers do not accept the money which Mallya has decided to pay, then they should also know how to recover it as per law. It is shocking as to why the government could not bring back this fugitive even though the UK’s Home Ministry had earlier agreed to his extradition to India.

Katuru Durga Prasad Rao

Hyderabad

The gig workforce

The emergence of new technologies is reshaping how work gets done. In 2021, the gig economy was estimated to be around $348 billion. The NITI Aayog report focusses on gig workers who are platform-based. The report states that estimating the gig workforce in India is beset with challenges. Employees who identify as partners, individual workers taking up multiple tasks and contracts at the same time, etc., are a few of the challenges. As for the conventional economy, the government must have a robust system in place to estimate the workforce in the gig ecosystem.

P Sundara Pandian

Virudhunagar, TN

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