In order to check the rupee slide, finance ministry is set to unveil a slew of measures to boost capital flows, which will help stabilise the rupee. The possible steps to boost capital inflows into the country include a special drive to raise non-resident deposits, bond issues by state-run companies, measures to attract sovereign wealth funds, easier norms for overseas borrowings and curbs on import of non-essential goods and encouragement to exports.
The new measures being considered by the finance ministry are in addition to steps taken recently by the Reserve Bank of India (RBI) to tighten liquidity and curb volatility in the rupee, which depreciated to a record low of 61.80 to the dollar on August 6. In its latest effort the central bank announced that it would auction Rs 22,000 crore of bonds every Monday to suck out liquidity and check speculation in the forex market. High current account deficit (CAD), rising gold imports, foreign institutional investors (FII) pullout and high dollar demand by the imports and banks are the main reasons for current slide in rupee value.
Earlier, the government had expressed the need of possible coordinated effort between regulators like RBI, SEBI and finance ministry to stem the rupee's slide and to handle an external shock. During the global financial crisis in 2008, these regulators had worked closely to contain the fallout in Indian markets.
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