Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
3-min read

Arun Jaitley Outlines Five Steps to Stem Rupee Fall After PM Modi Reviews Health of Economy

The finance minister said the government will introduce more measures to check the rising CAD and falling rupee in the next few days.

News18.com

Updated:September 14, 2018, 11:47 PM IST
facebookTwitterskypewhatsapp
Arun Jaitley Outlines Five Steps to Stem Rupee Fall After PM Modi Reviews Health of Economy
File image of Prime Minister Narendra Modi with Union Minister for Finance Arun Jaitley. (Image: Getty Images)
Loading...

New Delhi: The government Friday announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for FPIs, and curbs on non-essential imports, to contain the widening current account deficit and check the rupee fall.

The decisions were taken at a meeting chaired by Prime Minister Narendra Modi to review the prevailing economic issues. Modi was briefed by RBI Governor Urjit Patel, and top officials of the finance ministry on the health of the economy.

These measures are likely to have a positive impact to the tune of USD 8-10 billion, a top finance ministry official said.

Briefing media after the meeting, Finance Minister Arun Jaitley said the government has decided on "five steps" to contain CAD, which widened to 2.4 per cent of the GDP in the first quarter of 2018-19 due to the fall of rupee.

He said several issues were discussed during the meeting and decision on those are likely in the next few days. According to Jaitley, more issues would be discussed in the meeting with the Prime Minister on Saturday.

The minister said that external factors like policies adopted by the US, trade war and crude oil prices are impacting economies like India, despite "strong fundamentals".

However, "there are some issues on which immediate action is needed," the minister said while announcing steps to increase inflow of foreign funds and check CAD.

One of the important decisions is that mandatory hedging condition for infrastructure loans will be reviewed. This relates to external commercial borrowing (ECB).

It has also been decided to permit manufacturing entities to avail ECB facility with minimum maturity of one year, instead of the earlier limit of three years, Jaitley said.

Further, restrictions will be removed with respect to FPI exposure limit of 20 per cent in corporate bond portfolio to a single corporate group or company or entity and 50 per cent of any issue of corporate bond.

In April, the Reserve Bank had imposed these restrictions on FPIs.

With regards to rupee denominated bonds, popularly known as Masala bonds, Jaitley said it has been decided to do away with the withholding tax on bonds issued till March 2019.

The current withholding tax is 5 per cent. It is to be noted here that no Masala bond has been issued so far in the current fiscal.

Jaitley also informed that restrictions on Indian banks on marketing and under writing of masala bonds would be removed.

The Finance Minister further said that the government would restrict import of non-essential items and encourage exports.

However, he did not disclose the list of non-essential items which would be subject to import restrictions.

"To address the issue of expanding CAD, the government will take necessary steps to cut down non-essential imports and increase exports. The commodities of which imports will be cut down will be decided after consultations with concerned ministries and will be WTO-compliant," he said.

The restriction would also be imposed private imports of such items, sources said adding that the items have been identified.

To a question on whether NRI bonds would be issued to stem the rupee fall, Jaitley refused to comment.

Large trade deficit and rupee decline against the US dollar are putting pressure on the CAD, and these steps are likely to have a positive impact on the external sector.

Jaitley said the government gives importance to fiscal deficit and expressed hope it would be contained.

Economic Affairs Secretary S C Garg said the five measures would definitely have a meaningful impact. "It is difficult to give a specific number. I think it should have an impact of USD 8-10 billion," he said.

The rupee touched an all-time low of 72.91 against the US dollar on September 12 and it closed at 71.84.

The domestic currency has declined around 6 per cent since August and touched an all-time low of 72 level this week. Petrol and diesel prices have also touched record highs.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months. Use code FREEDOM.

Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwitterskypewhatsapp
Most Active
Company Price Change %Gain
Yes Bank 59.25 5.24
Indiabulls Hsg 467.85 3.84
Reliance 1,275.85 2.33
HDFC Bank 2,162.70 -0.52
ICICI Bank 395.40 -0.93
Company Price Change %Gain
Yes Bank 59.25 5.24
ICICI Bank 395.75 -0.85
Indiabulls Hsg 467.90 4.00
Bajaj Finance 3,175.35 1.85
Reliance 1,275.95 2.36
Top Gainers
Company Price Change %Gain
Zee Entertain 351.15 6.75
Vedanta 137.40 6.47
UPL 547.25 5.64
Yes Bank 59.25 5.24
BPCL 329.35 5.22
Company Price Change %Gain
Vedanta 137.50 6.55
Yes Bank 59.25 5.24
ONGC 122.30 4.66
M&M 533.10 4.09
Coal India 188.05 4.07
Top Losers
Company Price Change %Gain
IndusInd Bank 1,310.50 -1.88
ITC 236.10 -1.65
ICICI Bank 395.40 -0.93
Eicher Motors 15,383.45 -0.90
HUL 1,860.00 -0.65
Company Price Change %Gain
IndusInd Bank 1,310.35 -1.90
ITC 236.00 -1.71
ICICI Bank 395.75 -0.85
Power Grid Corp 201.40 -0.69
HUL 1,859.35 -0.69

Live TV

Loading...
Countdown To Elections Results
To Assembly Elections 2018 Results