Friday, 30 August 2013

News Hour: Manmohan Singh on Indian economic crisis

NEW DELHI: Expressing concern over successive depreciation in the value of the Indian rupee, Prime Minister Manmohan Singh on Friday said this was an outcome of external developments and promised measures internally to address the situation.

In a bid to lift sentiments in the currency markets towards the Indian currency, he also assured that there would be no measures on capital controls.

"Sudden decline in exchange rate is certainly a shock which will be addressed by other measures not by resorting to capital controls or reversing reforms," Manmohan Singh said.

"The depreciation in the value of the rupee since end of May is a matter of concern," the Prime Minister told the Lok Sabha. "What triggered the sharp depreciation in rupee was the market's reaction to unexpected external developments," he added.

"US federal reserve's tapering has caused general weakening in global currencies," the Prime Minister said.

"Clearly, we need to reduce our appetite for gold, economize the use of petroleum products and take steps to increase our exports," he said. At the same time, the fall in rupee's value was also good to some extent as it makes exports competitive.

The Prime Minister also assured that growth, which has slipped, will also pick up, even as everything would be done to contain the fiscal deficit at 4.8 percent of the gross domestic product (GDP). "Growth in first quarter of 2013-14 likely to remain flat will pick up in the next quarters," he said.

Manmohan Singh said the economy was also getting hit due to high current account deficit. He said the government and the RBI were taking necessary steps to reduce this current account deficit. "Government is confident of lowering current account deficit to $70 billion this fiscal," he said.

The Prime Minister expressed confidence that the rupee would recover and said macro stabilization was underway.


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