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More measures in the offing to revive growth momentum: Montek Singh

26 Jun 2012 Evaluate

After the government’s much hyped measures to boost foreign investments disappointed both markets and corporate and even failed to arrest slide in rupee, the Planning Commission Deputy Chairman Montek Singh Ahluwalia vowed that more such measures are in the offing to revive growth momentum and boost inflow of foreign funds. Apart from what has also been already announced, the government is working on other set of measures particularly, on implementation of large projects on which the Prime Minister has set up new mechanism to move things faster.

In a bid to boost Indian economy in the back drop of rupee depreciation, the Reserve Bank of India (RBI) eased External Commercial Borrowings (ECBs) and has enhanced foreign institutional investors (FIIs) investment caps in corporate bonds. The central bank also increased existing limit for investment in Government securities (G-Secs) by SEBI registered FIIs to $20 billion. It has allowed Indian companies in sectors of manufacturing, infrastructure and others having foreign exchange earnings to avail ECBs upto a limit of $10 billion.

The Planning Commission Deputy Chairman commending RBI’s efforts stated that they are encouraging basically the larger flow of resources and also affirmed that it is certainly a step in the right direction. He also went on to rebuff the criticism that the measures were not enough as the markets did not react positively and rupee slid further immediately after the measures were announced by the RBI. The BSE benchmark index Sensex, after surging to highest levels in around seven weeks high, sank by over 90 points post the announcement of RBI measures while the rupee which opened at 56.44, depreciated to 57.92 against a dollar immediately after the measures were announced.

On the recent disappointing performance of Indian currency, he said though the rupee has depreciated a lot, this has been a year in which currencies everywhere in the world are highly unstable. But he exuded confidence in the underline strength of the Indian economy and was hopeful that Asia’s third largest economy would come back to high growth trajectory.

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