Big announcement expected from Govt to curtile CAD

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Big announcement expected from Govt to curtile CAD

#1 Postby Biyatris » Wed Aug 07, 2013 11:36 am

Major announcement is being expected by next week as part of an all-out effort to curtail the widening Current Account Deficit (CAD), which has sent the rupee into a free fall and further weakened the economy.India’s CAD touched a historic high of 4.8 per cent of the GDP in 2012-13 and is seen as one of the key reasons for the weakness in the domestic currency. :ugeek:

According to Finance Ministry sources, the government may tell Public Sector Units (PSUs) like IRFC, PFC, IIFCL to float quasi sovereign bonds. The government will look to raise around $507 billion through the bonds. Another measure that is being looked at is import tariff hikes for non-essential imports. This is being done in an attempt to compress those imports. This measure may reduce the imports by $2 billion. The country spent a whopping $50 billion on gold imports last year.The ministry also intends to announce measures to stabilise the rupee. Both the CAD and rupee related steps are expected to come through some-time next week. Finance minister P. Chidambaram had indicated that the government will attract funds from non-resident Indians and clamp down on the import of non-essential items such as electronics.The government also expects to contain gold imports to the last year's level of 845 million tonnes to save a considerable amount of foreign exchange, which would help contain CAD.However, for Indians going abroad, the exchange rate of the rupee at the retail money changers works out to over Rs 64 to the dollar. Market experts expect the rupee to drop further unless the government and RBI take drastic steps.

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