On the day the rupee hit a record low of 71.97 against the dollar before recovering mildly, Union Finance Minister Arun Jaitley said there was no need to panic since the fall in the currency was driven by global factors and the Reserve Bank of India was doing whatever was necessary for currency management.
“If you look at the domestic economic situation and the global situation, there are virtually no domestic reasons which are attributable to this. The reasons are global. We must bear in mind that in the last few months, the dollar has strengthened against almost every currency. And therefore, most global currencies have weakened vis-a-vis the dollar,” Jaitley told reporters after a Cabinet meeting Wednesday.
The rupee plummeted against the US dollar on concerns of contagion from other emerging markets, hitting a fresh low of 71.97 before inching up to close at 71.76 a dollar, down 0.27 per cent from Tuesday’s close. The fall Wednesday marked the sixth consecutive session with the rupee settling lower against the greenback.
“I am quite confident that this upheaval which is going on qua the dollar… eventually, the inherent strength of the Indian economy has to play a very important role. And this fluctuation will calm down… I am sure that currency management in these areas done by the Reserve Bank… they are certainly doing whatever is necessary for this purpose. I don’t think there is any need for the world’s fastest growing economy to come out with panic and knee-jerk reactions,” he said.
Barring the US dollar, the rupee has strengthened against most other currencies in the last four-five years. “As far as other currencies are concerned, the rupee has consistently either strengthened or remained in a range. It has not weakened against any one of them. In fact, most of the other currencies in the world, compared to where it was four to five years ago, rupee is better off. I can’t say the same about the dollar. For instance, I will give you September 2013 vs September 2018 figures. The pound in September 2013 was 101.42 (to a rupee), today it is 92.05. Euro was 84.67, after five years it is 83.13,” he said. The rupee has strengthened against other emerging markets currencies as well.
He said shortages in the global oil market had led to spike in prices, which was also affecting India. “So if you take the overall package of global currencies, the people with whom we trade, there is one currency which has strengthened and the reasons are obvious, because of certain policies in the United States, there is flow of dollars into the United States. We are net buyers of oil and, therefore, if by creating shortages oil price is temporarily raised, that adversely impacts us, that’s an external factor. We are not in the trade war business, but when countries neighbouring us devalue their currencies, that has corresponding impact on us. Turkey had an impact on us,” he said.
JAN DHAN YOJANA
Describing the the Pradhan Mantri Jan Dhan Yojana (PMJDY) as a “runaway success”, Jaitley said the government has decided to make it an open-ended scheme and added more incentives to encourage people to open bank accounts. The PMJDY was launched in August 2014 for a period of four years as a national mission for financial inclusion to ensure access of financial services like bank accounts, insurance and pensions to the masses.
To make the scheme more attractive, Jaitley said the government has decided to double the overdraft facility from Rs 5,000 to Rs 10,000, and increased the upper age limit for using overdraft to 65 from 60. He said 32.41 crore accounts have been opened under the scheme and Rs 81,200 crore has so far been deposited in them. He said 53 per cent of the PMJDY account holders are women, while 83 per cent of the accounts are seeded with Aadhaar. The government also doubled the free accident insurance cover on RuPay cards for new Jan Dhan accounts to Rs 2 lakh.
On the political row over the Rafale fighter deal, Jaitley said: “Congress party has proved that in dynastic parties, ignorance is contagious. If a innocent person is not informed, then the entire party is not informed. What a great misfortune for the country that the president of a national party draws such kind of comparisons… There is escalation between 2007 and 2016. There is currency variation. The final price of the aircraft is 9 per cent cheaper… The fully weaponised aircraft’s 2016 price is 20 per cent cheaper than the 2007 offer… in the entire transaction, there is no scope for a private player. All 36 aircraft will be made in France and delivered to India.”
Jaitley assured flood-ravaged Kerala that the Centre would provide further relief after a proper estimate is done. He said Rs 600 crore sanctioned until now was only for interim relief purposes “when the crisis is maximum”. “We are now moving towards a stage of rehabilitation. What the Prime Minister has given is Rs 500 crore and the Home Minister has given Rs 100 crore… the Rs 600 crore is interim.”
“There is a mechanism that operates. For relief, you give immediate assistance, then the state makes a representation, the central team goes, along with the officers of the state, they will say how many houses destroyed, how many people lost there lives and on the basis of that they assess the damages.”
“We have a track record of going by settled norms, irrespective of whether it is a NDA state or non-NDA state, there are fixed norms, calculations are made and the money is released,” Jaitley said. —With Agencies