JOIN USQ1 export figures not encouraging, says Chidambaram
Export figures in the first quarter are “not encouraging”, Finance Minister P Chidambaram disclosed on Monday, adding that measures are being taken to reverse the trend.
The figures of exports in the first quarter “are not encouraging”, he disclosed without giving the numbers as he left that to the Commerce Ministry.
After reviewing the export figures with Commerce Minister Anand Sharma, Chidambaram said, “I am sure some measures will be taken to reverse this trend (declining exports) and our exports will be back on a moderate growth path so that trade balance does not expand.”
He said that financing current account deficit (CAD) year after year was a challenge and the only way to deal with the problem was by increasing exports.
“The more difficult task is to finance the CAD. It was not even in the vocabulary of discourse until a few years ago. It has become a serious issue because imports are rising faster than exports. And the gap has to be financed through invisibles and capital account.
“... but to do that year after year is a challenge. Long term answer to the CAD is to improve the exports,” he said.
Chidambaram said the government had financed the CAD through foreign inflows last year and also added about $3.8 billion to the foreign exchange reserves.
The government has been taking steps to encourage overseas investment and is in the process of relaxing FDI caps in various sectors.
Rupee concerns
Amid concerns over declining rupee, Chidambaram on Monday said the currency will find its level as steps being taken by the government to contain fiscal and current account deficits will improve investor sentiments.
“We are committed to contain the fiscal deficit within the target and we are addressing how to finance the current account deficit. Sentiment will turn in favour of the rupee. I think rupee will find its level,” he said in an interview with PTI here. The rupee had touched historic low of 60.76 level against the dollar on June 26 due to heavy capital outflows amid fears of early withdrawal of US monetary stimulus.
Both the government and RBI have taken steps to contain gold imports, which is putting pressure on the CAD. Measures have been taken to enhance FII inflows in addition to easing norms for domestic companies to raise fund from abroad.
The Finance Minister, however added there is ‘no good and bad value’ that one could attach to the price of the rupee.“It’s a price. Rupee is bought and sold. Dollars are bought and sold there is a price. It’s also a function of supply and demand. It’s also influenced by sentiment,” he said.
Unfortunately, Chidambaram said, it is not only the sentiment of Indian buyers and sellers that matters in the forex market.