Union Finance Minister Pranab Mukherjee, who is front runner in the race for becoming the next President of India, opined that the government is likely to come up with a host of measures to bolster market conditions. The finance minister stated that there are various steps that have been taken already and the government will be announcing further measures on June 25, 2012 to boost the wilting economic sentiment.
On growing economic growth concerns, the finance minister admitted that the gross domestic product (GDP) is showing signs of weakness but he remained confident that the economy will bounce back and sentiments would turnaround once government’s measures are implemented. The government is also likely to come out with measures to revive investor confidence and check fiscal deficit and current account deficit.
The government is also likely to announce measures to rein in the beleaguered rupee’s depreciating streak. The Indian currency, which has been Asia’s worst performing currency, touched its historical lows of 57.31 against the American dollar on June 22, 2012. Expressing worries over sharp depreciation in rupee and inflationary pressures, Pranab Mukherjee explained that at a time when the global economy is in turmoil, no country including a large economy like India can anticipate that there will be pocket of development. He further stated that the third largest economy in terms of purchasing power parity cannot remain insulated from adverse external factors.
With rupee losing over 20 percent against the US dollar in the last one year, it is expected that the Finance Ministry along with Reserve Bank of India would resort to measures like refinancing exporters via foreign currency and an interest rate subvention. Besides the deposit program, relaxing limits on foreign investment could also be considered by the government to halt the currency’s downslide.
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