Duty on gold,silver import and non-essential goods is set to go up even as the government announced a slew of measures including easier overseas borrowing norms to fetch an additional $11 billion this fiscal to arrest Indian rupee’s fall and check the burgeoning current account deficit (CAD),said Finance Minister P. Chidambaram.
The interest on foreign currency non-resident accounts has been liberalised to attract more deposits.
The customs notifications on the import of these items will be placed in Parliament tomorrow,P. Chidambaram told a press conference hours after he made a statement in both the Houses on measures to contain the CAD at USD 79 billion or 3.7 per cent of the GDP.
He refused to disclose the actual figures on import duty saying Parliament was in session and he would not make any statement outside.
“CAD is a problem (but) we have solutions. We will implement the solution (and) there is no room for panic”,the Minister told reporters,adding these initiatives would help in reducing foreign exchange volatility and contain the Current Account Deficit (CAD).
“CAD is as much a red line as fiscal deficit. If we can contain CAD,sentiment about currency market and rupee will significantly improve”,he said.
As regards the measures to increase capital flows,Chidambaram said that permission would be given to IRFC,PFC and IIFCL to collectively raise USD 4 billion through quasi-sovereign bonds for the infrastructure sector.
Chidambaram said that PSU oil companies would be permitted to raise additional External Commercial Borrowings (ECBs) to the tune of USD 4 billion.
He further said the liberalisation of the ECB norms and non-resident deposit schemes (NRE/FCNR) would fetch USD 2 billion and USD one billion respectively.
The Minister also expressed satisfaction over decline in oil and gold imports in the current fiscal.
“We may save USD 4 billion in gold import and USD 1.5 billion in oil import”,the Minister said,adding the gold import in the current fiscal was likely to come down to 850 tonnes from 950 tonnes in 2012-13.
As regards oil,he said,there has been a reduction in growth of consumption during April-June 2013 to 0.7 per cent from 10.3 per cent during the corresponding period last year.
Government sources said the likely hike in gold and silver import duties could lead to increase in smuggling but it has enough tools to tackle the problem.
On liberalising non-resident external and foreign currency non-resident deposit schemes,Chidambaram said incremental flows into these schemes would be exempt from CRR and SLR requirements.
In the FCNR accounts,interest on deposits with a maturity of three years or more has been deregulated. “So all together in liberalising FCNR,NRE deposit schemes we expect to get a billion dollars”,he said.