On a day when the rupee posted a recovery of 106 paise,finance minister P Chidambaram indicated that there would be further appreciation in the currency but said it would depend on macro-economic factors.
Acknowledging that the economy is in great stress,he promised that the government would bring in steps to not only stem the rupee slide but also to boost slowing growth.
The value of rupee is indeed a matter of concern… rupee must find its appropriate level… we think it has overshot its value. Rupee correction will take place, Chidambaram said,winding up a discussion in Lok Sabha on the first batch of supplementary demands for grants,which was later passed by voice vote.
The rupee had touched all time low of 68.80 to a dollar last month but strengthened to close at 66.01 on Thursday as markets cheered a slew of measures taken by the new governor of the Reserve Bank of India,Raghuram Rajan.
Referring to Prime Minister Manmohan Singhs recent statement in Parliament that some of the correction in the rupee was a much needed adjustment,Chidambaram said that its value would be determined by factors including inflation rate and the twin deficits.
If inflation is high,if our fiscal deficit is high and if our current account deficit is high … it will necessarily mean correction in the value of rupee … (However) the correction is the over-correction, the minister stressed.
Meanwhile,expressing disappointment over slowing economy that grew by just 4.4 per cent of the first quarter of the fiscal,Chidambaram tried to dispel the perception of gloom and pessimism and said the economy will bounce back. He further said that although the Central Statistics Office (CSO) reported a growth of 5 per cent in 2012-13,most of the states have reported higher growth and the government would look into the divergence.
Only two states reported state GDP growth of less than 5 per cent. All other states reported above 5 per cent…while states are reporting much higher growth rates,the CSO is reporting 5 per cent growth rate, he said.
The government last month sought Parliaments approval to spend an additional Rs 7,500 crore including Rs 1,000 crore for setting up of Nirbhaya Fund for safety of women and a similar amount for womens bank.
As most of the grants were of technical nature and would be matched by savings elsewhere,the cash outgo has been limited to only Rs 127.14 crore.