The Confederation of Indian Industry (CII) on Thursday expressed concern about the volatility of the Rupee, and called for a check on speculative activity.
In a statement issued here, CII President Kris Gopalakrishnan said: "We are seeing some panic reactions to the Rupee's depreciation, which in our view is not called for. Yes, the rupee is undervalued and we are hopeful that over a period of time it would find its level."
"We are more concerned with the volatility. Every effort has to be made to ensure that speculative activity on the currency is checked," he added.
Gopalakrishnan further said that there was a need to take both short and medium term actions.
"In the immediate term, consideration has to be given to issuing a sovereign guaranteed bond which would be of a substantial amount. Additionally, we need to explore if FII's can be exempt from short term capital gains tax. Foreign investments in the retail sector can be brought in through the creation of a Real Estate Investment Trust, and most importantly, we need to ensure that no part of the government announces any measures, which would be viewed as business unfriendly," he said.
"Over the medium term - we need to address the issue of current account deficit by building a robust exports sector and a strong domestic manufacturing base, he added.
Earlier, commenting on the benefits of the proposed Food Security Bill, Gopalakrishnan said: "In a country like India, food security is extremely important. With a significant section of the population living below the poverty line, government intervention to provide nutritious food is essential."
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But he added that there are concerns.
"Such a large outlay at this point in time would definitely have a negative impact on the fiscal deficit. This needs to be managed. The larger concern is regarding the effective implementation of such a high profile and critical social agenda of the government. The use of PDS raises questions about the efficacy of the model. Targeting is another area that would need special attention. CII hopes that appropriate focus would be given to these aspects - mainly that of targeting so that the needy can benefit from this programme," he said.