PM: Rupee storm a corrective; consensus needed for reforms

This,in itself,would correct the current account deficit to some extent, Singh said the first acknowledgement by the government that a defence of the rupee from its slide is uncalled for.

His comments cooled the rupee which gained 85 paise in the day to close at 65.70 against the US dollar. Fridays statement was Singhs first detailed statement on the current economic situation discussing the falling rupee,its effect on growth and the hefty current account and fiscal deficits.

Singh gave an assurance that the government would not revert to capital controls while seeking political consensus to go ahead with difficult reforms such as roll out of the goods and services tax and further opening up of the insurance and pension sectors.

The easy reforms of the past have been done. We have the more difficult reforms to do,such as reduction of subsidies,insurance and pension sector reforms,eliminating bureaucratic red-tape and implementing GST. These are not low-hanging fruits and they need active political consensus, the Prime Minister said.

These measures,he said would help improve the fundamentals of the economy,and also address the sudden decline in the rupee value that has depreciated by 25 per cent since April this year.

Singh attributed the sudden and sharp depreciation in rupee to various domestic problems including high inflation,high CAD and to global factors like US Federal Reserves plans to taper quantitative easing measures and tensions in Syria. Foreign exchange markets have a notorious history of overshooting. Unfortunately,this is what is happening not only in relation to the rupee but also other currencies, he said.

Blaming high gold imports and hardening crude oil and coal prices for the CAD,he said that the governments ultimate goal is to bring it down to 70 billion this fiscal. However,he evinced confidence that the economy would survive these challenges. We are faced with challenges but we have the capacity to deal with them.

Singh talks up rupee; Sensex rises 219 points

Mumbai: The rupee on Friday soared 85 paise to 65.70 against dollar and the Sensex jumped nearly 219 points to over two-week high levels after Prime Minister Manmohan Singh promised not to resort to capital controls or reverse economic reforms to tackle turbulence in markets. Stocks rose for the third day with the BSE benchmark Sensex firming up by 218.68 points to settle at 18,619.72 the highest level since August 14.

Meanwhile,the IMF has said Indias large fiscal and current account deficits have impacted market confidence and the rupee decline posed both challenges and opportunities for the country. The US India Business Council president Ron Somers said,Bold leadership that continues to open Indias economy and which advances reforms will help staunch the rupees slide. pti

StanChart cuts FY14 growth forecast to 4.7

New Delhi: Standard Chartered today lowered Indias growth forecast for the current financial year to 4.7 per cent from earlier 5.5 per cent,citing upside risks to inflation and fiscal deficit.

According to the global financial services major,sharp weakness in the rupee value is starting to weigh on Indias economy,as reflected in the slump in industrial activity and the spike in July WPI inflation.

We revise down our GDP growth forecast for FY14 to 4.7 per cent from 5.5 per cent, Standard Chartered said in a research note today.

The two factors have driven this downward revision,first is the weak industrial activity and the second factor is that slower industrial activity is likely to continue to weigh on the services sector. PTI