This refers to the Editorial ‘Cautious optimism’ (July 19). The disinclination of foreign investors to deploy funds in the domestic financial market, due to the losing strength of the rupee, besides the attraction towards the higher interest rates in other markets, and the higher dependence on imports for crude oil, edible oil and gold are pushing up the negative balance in the Current Account.

Increased capital inflow is key to controlling the climbing current account deficit.

The government has also liberalised the External Commercial Borrowing, norms for SLR, and CRR in respect of FCNR(B), and NRE deposits, and deregulated the interest rate on fresh FCNR(B) and NRE deposits.

The widening current account deficit and the existing inflation level which is beyond the target band of the RBI are discouraging factors and therefore more refoems are needed to enhance capital flows from abroad.

VSK Pillai

Changanacherry (Kerala)

Apropos Editorial ‘Cautious optimism’ (July 19), though the Finance Ministry’s monthly economic review and the RBI do give the brighter aspects of the economy, there appears to be a few hurdles coming in the way.

Southwest monsoon remains active resulting in a spur in rural credit. Automobile sector is bouncing back with a surge in two-wheeler and tractors sales. The monthly GST collection is also impressive with more items coming under its ambit.

Though the government’s recent fiscal measures such as hike in import duty on gold, windfall tax and the special excise duty on export of petroleum products would help in reducing the fiscal deficit in the long run, the widening Current Account Deficit is worrying, given the rupee’s continuous slide which may end up draining forex reserves.

RV Baskaran

Chennai

Rupee’s relentless slide

That the rupee has fallen over by 6.5 per cent against the US dollar since the beginning of 2022 is a matter of concern given its concomitant negative impact on burgeoning inflation and current account deficit.

While factors such as Ukraine war and the resultant disruptions in the global supply chain coupled with increase in commodity prices leads to an unprecedented level of inflation in developed countries, it has now been mostly tackled through monetary tightening measures which now pushes the global investors to park their money in dollar- denominated assets and thus contributing to the rupee’s precipitous fall.

Steps initiated by the government to ease the growing pressure on Indian currency such as selling dollars and enhancing the rupee-denominated trade will have only limited impact. Under these circumstances, the RBI needs to let the market reverse the ongoing slide in value of Indian currency.

M Jeyaram

Sholavandan (TN)

Easing infra projects

With reference to the article ‘Infra projects need community connect’, the writer has raised some critical questions. Indeed land acquisition remains the biggest bottleneck for the infrastructure projects.

A deeper engagement with various stakeholders like local communities through local administration, will help State governments and the Centre in creating sustainable infrastructure projects at a faster clip.

Generally road projects are pushed by local MLAs and MPs to bring better connectivity and development to their constituencies. It would be better if the local populace is brought into confidence before such a project request is pitched to a central minister. The District Magistrate or Local Panchayat can also play a vital role by clearly communicating the direct and indirect benefits of such projects.

Bal Govind

Noida

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