M A I N   N E W S

Rupee slides past 66 to $; Sensex slumps 600 points
FM stresses more reforms, lists steps to revive economy
Tribune News Service & Agencies

New Delhi, August 27
A day after UPA’s ambitious Food Security Bill was cleared in the Lok Sabha, the BSE Sensex plunged around 600 points to end below the 18,000 mark and the rupee continued its free fall past the 66-mark to an all-time low.

The massacre in the market came on a day when the government announced it had cleared 36 power and infrastructure projects worth Rs 1.83 lakh crore through the Cabinet Committee on Investments.

As the rupee posted its biggest percentage (2.9%) fall in 18 years again, Finance Minister P Chidambaram said the currency was undervalued and hoped it would find its appropriate level.

The rupee fell to a lifetime low of 66.30 to the dollar before closing at 66.24 on month-end demand from importers, capital outflows and food bill subsidy concerns.

PC’s prescription The Finance Minister blames divisive Indian politics for lack of uniformity in the country’s economic policy Says government will cut fiscal deficit and maintain it below 4.8% and take steps to contain current account deficit at $70 bn, lower than $88.2 bn in 2012-13 Bats for need to promote manufacturing and not rely on imports Blames change in US Federal Reserve policy for recent slump

The rupee has lost 17 per cent against the dollar so far this year — making it the worst performer by far among Asian emerging market currencies.

Chidambaram blamed the divisive Indian politics for lack of uniformity in the country’s economic policy and aligned himself with the pro-reform group saying he would want more reforms and lesser number of restrictions at this stage.

Chidambaram listed out 10 steps to promote manufacturing to enable growth in exports, contain debt and expenses, and utilise the good monsoon. “If Parliament cannot agree on these 10 steps what will be the message to the world… despite the political divisions we can weave a tapestry to give a general direction. Look at the different voices on land acquisition, all power projects are facing protests and hydro-electric projects are also stalled,” he said while referring to the divisions.

The Finance Minister was replying to a debate on the economic situation in the Lok Sabha. His 10-step guide started with reform and went on to suggest cutting down on fiscal deficit and maintaining it at a level lower than 4.8 per cent.

“We will contain the current account deficit (CAD) at $70 billion, lower than the $88.2 billion in 2012-13. The government will finance it.”

Defending the government’s actions to address the economic woes, Chidambaram said: “We must add to our foreign exchange reserves.”

On infrastructure, he said: “We will revise investment climate and unlock the projects. Public sector enterprises have been asked to utilise their capital expenditure soon.”

With good monsoon this year, Chidambaram said the government would do everything to boost agriculture.

“We have to encourage manufacturing and not rely on imports.” He attributed the latest crisis to the change in the US policy announced on May 22.