India Acts To Strengthen Rupee; Drastic Cuts In Non-Essential Imports Proposed

On Friday, a measure to increase capital inflows has been called for in order to check the falling rupee in the global market and rising current account deficit (CAD). The next measures proposed are cutting down non-essential imports and boosting exports.

On September 14, Friday, Minister of Finance Arun Jaitley informed the media that they are adopting necessary measures to cut out on non-essential imports and increase exports keeping in mind the 2.4 per cent CAD for the June quarter.

Mint quoted him saying “The items will be identified in consultation with the line ministries in the next few days and necessary decisions will be taken. We will also keep in mind that the decisions are WTO-compliant.”

Gold and electronic goods as an import have been increasing in the previous few months, which account for non-essential items. Import of gold in July and August grew by 65 per cent to USD 3.3 billion and electronic items by 15 per cent to USD 24.7 billion.

Colour TV sets, digital cameras, etc. have grown over 100 per cent from April to July.

Federation of Indian Export Organisations (FIEO) director general and CEO Ajay Sahai said, “If it is finished products, that can be looked into and that too, luxury-end items can be targeted. India should also not be seen as a country which is indulging in protectionism.”

Since the United States has challenged India’s export subsidies at the WTO, the government finds it difficult to incentivise such sectors.

The banking sectors lending support to exporters is one of the solutions proposed. Liquidity has turned into a significant problem. Banks usually do not offer support to such sectors.

Sahai claims that funds up to Rs 12,000 crore are pending approvals due to delay in GST refunds to the exporters.