Fundamentals of economy strong, will reverse rupee setback, PM promises Parliament

Prime Minister Manmohan Singh’s address to Lok Sabha on rupee and economic crisis.

As reported by NDTV, Manmohan Singh on rupee and economic crisis:

  • The fall of the rupee has been a matter of concern, the rupee has depreciated sharply against the dollar
  • What triggered sharp and sudden depreciation of rupee was markets’ reaction to unexpected external developments
  • This led to reversal of capital flow to emerging economies
  • Rupee has been especially hit because of large current account deficit and other investment factors
  • We intend to act to reduce current account deficit
  • We will be able to reduce our current account deficit to 70 billion dollars
  • Inflation in India has been much higher than in advanced countries
  • Correction in exchange rate was necessary to correct this
  • Deprecation to some extent can be good for economy
  • Foreign exchange markets have a notorious history of over-shooting. This is happening not just for rupee but also for other currencies
  • The Finance Minister has clarified on this matter and I take this opportunity to reaffirm our position
  • Sudden decline in exchange rate is certainly a shock but will not address this through capital control
  • Value of rupee is ultimately determined by the fundamentals of the economy
  • Growth has slowed down in recent months
  • I expect growth in Q1 of 2013-14 to pick up as effect of good monsoon kicks in
  • Government will do whatever is necessary to keep fiscal deficit at 4.8 per cent this year
  • Important to control expenditure and spend carefully to cut back on subsidies that do not reach the poor
  • The RBI will continue to focus on bringing down inflation
  • As the fruits of our efforts materialise, the rupee will start to recover
  • Indian banking sector has seen some rise in bad debt

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