Ahluwalia says 'artificially stabilising' rupee not right

Expects CAD to fall below 5% in the fiscal year ending in March 2014, says fiscal deficit coming in control

Propping up the rupee "artificially" is not the right thing to do, Montek Singh Ahluwalia, the deputy chairman of the country's Planning Commision said on Thursday.

The Indian rupee hit the psychological level of 57 to the dollar, near a one-year low, on Thursday on the back of weakness in domestic shares and continued dollar demand from oil importers.

The central bank has largely stayed away from intervening in the foreign exchange market during the rupee's current fall, dealers said.

Ahluwalia, who is an adviser to the government in his current role, also said he expected the current account deficit to fall below 5% in the fiscal year ending in March 2014.

He added he expected gold imports to fall this fiscal year. India on Thursday increased import duties on gold by a third to 8%.

On fiscal deficit, he said that it was clearly coming in control.

India's fiscal deficit fell to 4.9% of GDP in the fiscal year ended March and the government targets it at 4.8% in the current fiscal year.