New Delhi, Oct 6 (IANS) With current account deficit (CAD) still remaining a concern, Finance Minister Arun Jaitley on Saturday hinted at more steps to rein in the problem.
"To bridge current account deficit and to bolster flow of funds into India, we are ready and have been gradually taking a lot of steps to deal with the situation... Depending on the situation as it proceeds, you will probably see more steps which are required," he said at the Hindustan Times Leadership Summit.
He said the government has already taken a series of steps, including cutting its borrowings by Rs 70,000 crore, doing away with withholding tax on masala bonds for the moment and allowing oil marketing companies to raise funds worth $10 billion.
Jaitley said the current account deficit is directly linked with global oil prices, which has been going up recording the highest level in the last four years, and is going to have some adverse impact.
"We are trying our best to take measures to narrow it down. Some more steps are likely. But there are two factors, both external: one is the oil prices and the second is the policies within the US which is leading to the hardening of the dollar itself, and therefore affecting other currencies all over the world.
"As far as our internal situation is concerned, we have to consolidate our systems so the adverse impact on our growth is the least," the Minister added.
On the falling rupee, Jaitley said it is a cause of concern due to the variance in political and economists' opinion, and if one only looked at the transient situation.
"But since it is a creation of two factors -- oil and hardening of dollar -- once you have a settling impact, it (rupee) will find its own level. But what that level is, it has to be decided on the real strength of where the rupee stands and where the economy stands," he said.
Expressing confidence in the robustness of Indian economy, the Finance Minister said the current situation is a "short-lived" phenomenon and won't last indefinitely.
Jaitley said India has huge avenues of growth over the next 10-20 years to sustain its high growth rate.
"If you leave these two transient situations (oil and dollar), India has consistently acquired 7.5 (+/-) per cent growth rate, and we comfortably achieve that. In today's global situation, that is the highest in the world.
"With these factors over the next two decades, there is a lot of potential. India's ability to maintain the present growth rate for a decade or two is reasonably certain," he said.
Jaitley hoped that India would never see the kind of "horrible" economic data as it existed in 2013, before the Bharatiya Janata Party (BJP) came to power.
"CAD at that time was 4.7 per cent, fiscal deficit at 5.6 per cent and during the UPA II, the average inflation was around 10.4 per cent between 2009 and 2014. Hopefully, India would never have that kind of horrible data again," he said.
Maintaining fiscal prudence is a top priority for his government, as it can take certain liberties only if the economic data is good, Jaitley added.
Oil, rupee unleash bears, mow down equities
Mumbai, October 6 (IANS) A free-fall in rupee value coupled with high crude oil prices, along with a massive outflow of foreign funds, dragged the key domestic equity indices lower for the fifth consecutive week.
Additionally, the Reserve Bank of India's new policy stance of "calibrated tightening", uncertainty in global trade and fears over fiscal slippages led to the downward trajectory.
The S&P BSE Sensex plunged by over 2,000 points in only three trading sessions, while the NSE Nifty50 has shed over 650 points.
The Indian equity market was closed on Tuesday to observe Gandhi Jayanti.
On a weekly basis, the Sensex closed at 34,376.99 points, lower by 1,850.15 points or 5.10 per cent from its previous close.
Similarly, the wider Nifty50 of the National Stock Exchange on Friday closed at 10,316.45 points, down 614 points or 5.61 per cent from the previous week's close.
The market breadth on both NSE and BSE was negative in three out of the four trading sessions of the week.
"Domestic markets extended losses week after week on account of depreciation in rupee, higher crude prices, continuous selling by foreign investors, rising US Treasury Bond yields, and of course bloodbath in the small and mid-cap stocks...," said D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors.
"Fall in the rupee led to a sharp rise in government bond yields, due to increasing expectations that the RBI's monetary policy committee (MPC) could go for a bigger rate increase than expected. However, the central bank kept rates on hold."
Apart from high global crude oil prices and the government's efforts to ease domestic transportation fuels costs, the RBI on Friday belied market expectations of a rate hike. However, the "neutral" stance of monetary policy was changed to "calibrated tightening" which triggered a massive sell-off in the equities market.
The RBI's move also impacted the foreign participants in the domestic equity markets and the rupee value.
In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 9,522.44 crore, while the domestic institutional investors bought Rs 6,933.07 crore stocks in the past week.
Figures from the National Securities Depository (NSDL) suggested that foreign portfolio investors (FPIs) divested Rs 7,497.46 crore, or $1,025.28 million, in the equities segment during the week ended October 5.
On the currency front, the rupee closed at 73.77 on Friday, weakening by Rs 1.29 from its previous week's close of 72.48 per greenback.
The Indian rupee plunged to a record low of over 74 during the week.
According to Deepak Jasani, Head of Retail Research at HDFC Securities: "It was the worst week in two years. Mid-cap and small-cap stocks witnessed heavy selling pressure through the week (though less than the Nifty). GoI's decision to ask OMCs (oil marketing companies) to cut prices of petrol and diesel was not welcomed by the market participants."
"There were no sectoral gainers for the week. The top losers were energy, auto, FMCG, realty and pharma indices."
The only weekly Sensex gainers were Yes Bank (up 1.48 per cent at Rs 206.20); Wipro (up 1.47 per cent at Rs 325.30 per share).
The major losers were Bharti Airtel (down 16.67 per cent at Rs 296.75); ONGC (down 16.51 per cent at Rs 146.95); Reliance Industries (down 16.21 per cent at Rs 1,049.85); Mahindra and Mahindra (down 12.28 per cent at Rs 768.60); and Hero MotoCorp (down 11.35 per cent at Rs 2,740.85 per share).
