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Finance Minister P Chidambaram on Friday held deliberations with officials from the finance and commerce ministries to discuss additional steps for tackling the problem of rupee fall and a high current account deficit (CAD).
Officials said some measures, which might include curbs on some non-essential imports and some liberalisation in norms for raising foreign debt, could be announced over the weekend or early next week. The finance ministry has compiled a list of non-essential goods which could be subjected to a higher customs duty to reduce the import bill and bring down the CAD. A departmental committee has given its report and the axe might fall on electronic goods and other consumer durables.
The finance minister held deliberations with Commerce Secretary S R Rao to discuss measures for boosting exports. There would be a board of trade meeting towards the end of this month, where some more measures to incentivise exports are expected. The government has already raised the interest subvention on select commodities, which would cost the exchequer Rs 450 crore.
On Thursday, Economic Affairs Secretary Arvind Mayaram had said the finance ministry would announce more measures to check the volatility in the rupee and the CAD problem.
"Wait till the end of the week... The finance minister would be talking about this later," Mayaram said.
Additionally on Thursday, the Reserve Bank of India decided to auction Rs 22,000 of government cash management bills every Monday to drain out more liquidity from the money market. The rupee strengthened on that day and closed at 60.88 a dollar.
The central bank's measures to drain out liquidity, announced on July 15, had failed to stem the weakness as the currency went on to hit an all-time closing low of 61.30 against a dollar on Wednesday. The liquidity situation also eased with overnight rates falling below the double digit mark.
The CAD hit a record high of 4.8 per cent of gross domestic product in 2012-13, while the rupee has depreciated by 12 per cent against the dollar since the beginning of this financial year. High CAD would be a problem this financial year as capital flows are also dwindling.
Earlier, the finance minister had said public sector undertakings and state-run banks might be asked to raise money overseas and some non-essential imports might be curbed to contain and finance the CAD. He said the government was looking at furthering relaxing external commercial borrowing norms and attract investments from sovereign wealth and pension funds as well as non-resident Indians.
