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New Delhi: A day after Narendra Modi-led government announced five decisions to control current account deficit (CAD), former Finance Minister and senior Congress leader P Chidambaram on Saturday asserted that Centre’s five measures were ‘half-hearted and too late’.
“Government’s five ‘measures’ announced yesterday are half-hearted and too late. Because government was in denial,” Chidambaram tweeted.
He added,”The worsening of the CAD has been evident for several months; yet the government did nothing. The slide in CAD, the FPI outflow, the weakening rupee and the depletion of forex reserves were wake-up calls that were ignored.”
Government's five "measures" announced yesterday are half-hearted and too late. Because government was in denial.
— P. Chidambaram (@PChidambaram_IN) September 15, 2018
Earlier on Friday, to stop further depreciation of the rupee and widening of CAD, the government announced five measures and a broad policy decision to curb non-essential imports and increase exports.
Speaking to reporters after the meet, Finance Minister Arun Jaitley had said that a broad policy decision has been taken to address the issue of expanding CAD (Current Account Deficit) under which the government will take necessary steps to cut down non-essential imports and also increase exports.
Talking about the first measure, Jaitley informed that in reference to External Commercial Borrowings (ECBs), the mandatory hedging condition for infrastructure loans will be reviewed.
In another measure, the government has also decided to permit manufacturing sector entities to avail external commercial borrowing up to 50 million with a minimum maturity of one year. Previously, this maturity was of three years.
In a third measure to tackle higher current account deficit, a decision has been taken to review removal of exposure limit of 20 percent of FPI’s corporate bond portfolio to a single corporate group i.e company and related entities and 50 percent of any issue of corporate bonds.
Two other significant measures were taken in reference to masala bonds, detailing about which, Jaitley said, “It has been decided that this financial year 2018-19, there will be an exemption from withholding tax for issuance done in this year (up to 31 March 2019).
Also, there will be a removal of the restriction on Indian banks, market making in masala bonds, including a restriction on underwriting of masala bonds.”
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