New Delhi: The Indian government late on Friday announced a slew of steps aimed at stemming a steep decline in the rupee, which has fallen rapidly this year, and it left the door open to announcing more measures.
After an economic review meeting chaired by Prime Minister Narendra Modi, finance minister said the government plans to take measures to cut down “non-necessary” imports, ease overseas borrowing norms for the manufacturing sector and relax rules around banks raising masala bonds, or rupee-denominated overseas bonds.
The moves follow sharp declines in the rupee, the worst-performing Asian currency this year. Despite strong GDP growth, the rupee has weakened about 11 percent this year amid higher oil prices and an emerging markets sell-off.
This has widened India’s current account deficit and pushed its balance of payments into the red in April-June for the first time in six quarters and stoked inflationary pressure in the economy.
“Dollar outflows, trade wars and high global crude oil prices have hit India despite strong fundamentals,” said Finance Minister Arun Jaitley, adding a falling rupee has hurt the current account deficit and this needs to be dealt “immediately.”
Jaitley said manufacturing entities will be permitted to make use of external commercial borrowings (ECBs) of up to $50 million with a minimum maturity of one year, down from three years earlier.
